Smaller lenders gaining favour with first-home buyers

Smaller lenders are making up ground on the major banks when it comes to meeting the needs of first-home buyers, according to AFG’s September Mortgage Index. 

On the back of a healthy 12.8% jump in mortgage sales for the month, non-major lenders accounted for 29.3% of mortgages sold to first-home buyers, up from 22.3%  in August. 

Non-major products were also more popular with those seeking to refinance and even investors, who are traditionally the least likely to switch from the Big Four, AFG sales figures revealed. 

Chris Slater, AFG's NSW/ACT state manager, tells Property Observer there has been pretty aggressive price in the market place across the board.

“The second tier is right up there at the forefront. They are aggressively chasing market share. They are back in the game in a big way,” he says.

Slater says the likes of Citibank, Suncorp, AMP and ING have all matched the major banks with their rate cuts of late.

Furthermore he says clients of AFG’s mortgage brokers are more receptive to the second-tier lenders, with a noticeable shift in the second quarter of the year.

According to the latest JP Morgan/Fujitsu Mortgage Industry Report there is an aversion among prime first-home buyer segments such as the “young affluent” and “young growing families” to using the branch networks of the major banks in favour of using devices such as tablets and smartphones.


The growing popularity of mortgage products outside the Big Four comes as smaller lenders rated highly in the September product ratings compiled by Canstar Cannex.

The financial products research group rated Coastline Credit Union’s Minimiser Home Loan as the third best variable rate mortgage, with ECU Australia’s Loyalty Plus Premium Variable Home Loan coming in fifth.

Out of the 24 variable loans rated “outstanding value” by Canstar Cannex, 15 are offered by non-bank lenders, including Mortgage House, Newcastle Permanent and State Custodians.

Credit Unions and building societies rated highly in the benchmark three year fixed rate category with nine of the 11 products rated “outstanding” by Canstar Cannex offered by mutuals.

Community CPS Australia’s Pinnacle +Plus Pkg Residential loan rated third best, with CUA fourth and Heritage Building Society fifth.

Canstar Cannex rated ANZ as having both the best valuable variable and three-year fixed-rate mortgages products in the market.

The major banks still continue to dominate overall mortgage sales by AFG brokers, with their brands accounting for 80.1% of the market.

AFG accounts for about one in 10 mortgages written in Australia.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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