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The latest APRA figures have found an increase in the flow of residential mortgages to non-major and foreign subsidiary banks, while third-party flows to credit unions and the majors have fallen.
APRA’s quarterly ADI property exposure statistics for the September 2017 quarter, released Tuesday (5 December), show that, overall, broker-originated home loans are on the rise.
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The total share of broker-originated loans approved by ADIs over the September quarter was 49.9 per cent, up from 49.2 per cent in September 2016.
However, a closer look at the data reveals that non-major lenders and foreign-owned banks are seeing the biggest increase in broker flows.
Foreign subsidiary banks lent $4.7 billion over the September quarter, up by 17.5 per cent on September 2016. Broker-originated loans now account for over 70 per cent of all mortgages by foreign-owned banks operating in Australia.
While banks like ING Direct have been operating in the broker channel for many years, others have recently returned, signaling the strength and viability of Australia’s mortgage broking industry.
Following 12 months of due diligence, HSBC decided to return to third-party distribution in May this year, working exclusively with Aussie Home Loans. The bank has plans to join more aggregation panels over the coming years.
APRA data shows that mortgage brokers sent $3.3 billion worth of home loans to the foreign-owned banks in September, up by 22.2 per cent on the September 2016 quarter.
All other domestic banks (excluding the big four), also known as the non-major banks, are attracting the largest proportion of broker-originated loans. Third-party originations accounted for 50.1 per cent of all non-major mortgages in September, up from 47.9 per cent on the September 2016 quarter.
Total home lending by the non-majors was up by 31.7 per cent to $9.4 billion over the September quarter.
The increases have been at the expense of the big four. APRA’s data shows that mortgage lending by the major banks was down by 2.2. per cent and broker-originated loans fell by 1.9 per cent.
Interestingly, APRA’s figures show a 35 per cent increase in loans approved by the majors that fall outside serviceability.
Credit unions and building societies saw a 12.5 per cent drop in home loan volumes over the September quarter compared to the same quarter last year. Broker-originated loans dropped by 35 per cent. Broker loans accounted for just over 30 per cent of flows over the September quarter compared to more than 40 per cent in September 2016.
[Related: ‘No wonder’ broker share at 53%: AFG]
