Golden age for big four home loan dominance ending

The golden age of banks controlling the home loan market seems to be ending, with active home borrowers set to be the main beneficiaries.

The market share of the big four banks continues to fall.

According to research from UBS analyst Jonathan Mott mortgage origination via the big four’s branch networks has fallen from a peak of 48% in 2013 to presently around 37%.

ANZ’s branch network experienced the sharpest reduction.  

As a result of the shift, the major banks’ share of new home loans has dropped from 78% to 71% over the past six years.

Mott noted the majors still have 79% share of all outstanding mortgage credit outstanding, but that new lending competition was intensifying as customers migrate away from the major banks.

Reputational damage post the banking royal commission accelerated the trend along with repeated times of not fully passing through RBA rate cuts to its annoyed variable rate customers.

The Hoff, actor David Hasselhoff, was the unlikely influencer that helped turbo-boost the ANZ Bank's recent home loan activity.

The ANZ saw a 30% plus bounce in the home loan applications accompanying the recent two month campaign featuring the 1980s star of Knight Rider and Baywatch.

The cheesy ANZ advertising campaign also promised 300,000 bonus Qantas Points for a loan of $300,000 or more, which could comfortably take a family of four to Fiji return or a couple to New York.

The marketing campaign slogan was "a home loan offer so good you don't need a celebrity".

The two month campaign was perfectly time to capture the spurt in buying interest around the time of the May election.

The multi-media ANZ campaign ran from July until late August, attracting some 1.7 million views on YouTube.

There was certainly some negative social media suggesting The Hoff was a "has been". 

The Hoff, who proposed to his wife, Hayley Roberts at the top of the Harbour Bridge climb in 2012, was back in Sydney for just a day to do the filming earlier this year.

Helping turn the tide on its falling home loan applicants, the ANZ chief executive Shayne Elliott credited the campaign.

He noted the Hoff campaign had blown through its volume targets "every single day".

“We think it’s a signal to the market we’re back — to the broker market, in particular, but also to our branches," he said.

Elliott also noted the increased volume came through "operational" improvements and an improved property market.

Before the campaign began, APRA statistics showed ANZ had 15% of the owner occupier home loan market, well behind the Commonwealth Bank's 26% and Westpac with 21%.

"Average (application) levels in the second half were more than 30% higher than the first half," the chief financial officer Michelle Jablko said.

Elliott conceded earlier this year the bank had become too conservative assessing home loan applications.

Westpac chief executive Brian Hartzer advised this week that he expects lending to be “relatively flat” over the 2020 year.

Westpac highlighted that the group’s credit quality “remains sound”.

“Nevertheless, we have seen a small rise in 90 day mortgage delinquencies over the year, in part due to low wage growth and slowing economic activity.

"70% of our Australian home loan customers are ahead on their repayments including offset accounts,” he added.

Hartzer said the economy would continue to feel the squeeze throughout 2020 as the residential construction cycle headed towards a low.

This article first appeared in The Daily Telegraph.