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Investors and borrowers seeking interest-only repayment terms are flocking in droves to Australia’s non-major lenders, according to latest research.
According to the Australian Finance Group’s (AFG) latest mortgage and competition index – which is based off data collected by the aggregator’s network of 3,000 brokers – the big four banks’ share of the investor space contracted sharply in the September quarter.
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In the three months to 30 September, the share of investor lodgements to the big four banks slipped from 56.2 per cent to 50.2 per cent.
When compared to the same quarter in 2018, the major banks’ investor share is down from 57.1 per cent.
This coincided with a sharp drop in their share of interest-only lodgements, from 55.4 per cent in the three months to 30 June, to 47.8 per cent in the three months to 30 December.
When compared to the same quarter in 2018, interest-only lodgements to the major banks are down from 57.8 per cent.
This comes amid a resurgence in investor activity in the home lending space.
According to the latest Lending to Households and Businesses data, the value of investor lending commitments increased by 5.7 per cent in September – the sharpest monthly increase since September 2016. This followed a 4.6 per cent increase in July.
The AFG data reported that overall, the big four banks’ share of the mortgage market fell from 57.6 per cent to 54.1 per cent.
Accordingly, non-major market share increased from 42.4 per cent to 45.9 per cent – the highest reported share since 2007.
Reflecting on the rise in non-major market share, AFG CEO David Bailey said borrowers are benefiting from the enhanced competition in the mortgage market.
“Consumers are continuing to express a desire to seek out competitive offers,” he said.
“First home buyers, upgraders and mortgage-holders refinancing have driven the market share of the non-major banks.
“From the perspective of loan volumes, we are now approaching a 50-50 split between the majors and non-majors. Something unheard of as little as five years ago.”
He concluded: “This represents a fundamental shift in the dynamic between lenders. Consumers are sending a very clear message that they want the choice and the transparency of a competitive home loan market in Australia, and mortgage brokers are delivering.”
[Related: CBA, Westpac lose ground in broker space]
