The dominance enjoyed by the big banks in the mortgage market has been loosened by their smaller rivals as competition moves from fixed-rate mortgages to variable rates.
Figures from PEXA, a platform for digital property settlement, show that for NSW and Victoria combined, the major banks and their subsidiaries went from adding 1575 more mortgages than they lost in March 2021, to losing more than 2600 last month.
By comparison, after adding 1060 mortgages in March 2021, non-major bank lenders saw their home loans business soar to a net 5787 last month.
Big banks are responding to increasing competition from smaller rivals as new figures show their dominance is waning.Credit:Peter Rae
Mike Gill, head of research at PEXA, which collects real-time property transactions on its e-conveyancing platform, says the big banks are losing ground to non-majors in both new home loans and mortgage refinancing.
“This was driven by the major banks increasing fixed loan rates in expectation of interest rate rises, together with non-majors competing strongly on variable rate loans,” he says.
“We suspect borrowers were also attracted to non-major lenders, given they may offer quicker approval times with an increased likelihood of loan approval, compared to the major banks, with their tighter lending requirements,” he says.
Still, there is growing evidence that big bank mortgage approval turnaround times have improved. The Broker Pulse report from Momentum Intelligence shows a steady improvement.
PEXA figures show non-majors are doing well in new mortgages, and particularly well in refinanced mortgages. Most of the competition for new business by lenders is now with variable rates, as fixed rates have moved higher in advance of looming official interest rate hikes.
Australian Bureau of Statistics lending indicators show that the popularity of fixed rates, which peaked during 2021, is now sliding. The proportion of fixed rate loans funded in February was just 28 per cent, down from a peak in July 2021 of 46 per cent.
Cheaper minnow mortgage lenders taking business from big banks
Source: Philippines Alive
