Non-majors grow market share of home refinancing: AFG index

Non-majors have increased their share of the Australian home loan refinancing market in the three months to August, with ING leading the charge while CBA lost share, according to the latest AFG Competition Index.

Reserve Bank of Australia’s decision in August to drop the official cash rate saw a flurry of activity by lenders, with most choosing to pass on a cut to their own rates, but the level of discount was varied. 

Non-majors have been the biggest beneficiaries, increased their share of the refinancing market to 36% from 31% in the previous quarter. 

Lenders also typically passed on a greater interest rate cut to owner-occupiers than to investors and many delayed passing on their rate cuts for several weeks after they were initially announced. 

AFG general manager of Sales and Operations, Mark Hewitt, explained the shift. “ING are the big winner, lifting their share from 3.1% to 7.8%. CBA has taken a back seat dropping their share of the refinancing market from 20.2% to 14.6%,” he said. 

“In terms of overall mortgage sales, ING are at a 12 month high on 5.2% of the non- major market. This is at the expense of Suncorp, who are now sitting at 1.8% after a peak of 7.6% of the non-major market back in March of this year. 

Competition between the majors for the investor market saw a number of changes to market share across the quarter. CBA pulled back to close the quarter at 19%, but still tops the list with ANZ jumping to second place with 15.7% and Westpac showing a steady lift of their share of the investor market across the quarter to now be sitting at 15.2%.

“Westpac also cemented their position as the lender of choice for First Home Buyers. They now fund nearly 24% of all First Home Buyer loans.” 

The traditional jostling for position that occurs across the market as a whole was again evident in the results for the majors. 

“Across all mortgage types ANZ and Westpac both regained market share to close out the quarter at 16.9% and 13.8% respectively. At the same time CBA pulled back from pricing discounts to drop their share to 17.5%,” said Hewitt.

Record low interest rates have also seen fixed rate products in hot demand this year. 

“ANZ has doubled their share of the fixed rate pie since April, with their total share of this market now sitting at 24%,” said Hewitt. “In the same period CBA has seen their share of the fixed rate market shrink by 67%.”

“For the non-majors chasing those looking to fix their interest rate, ING was again a winner doubling their share of that segment of the market.”