Signs of home loan market recovery, non-major market share at record high: AFG

Signs of home loan market recovery, non-major market share at record high: AFG
Signs of home loan market recovery, non-major market share at record high: AFG

The first glimpses of recovery are emerging in the Australian mortgage market, with an increase in lodgements seen for the first time in a year, according to the latest AFG Index.

Notably their findings showed that, non-major lenders are driving much of the activity, responsible for a record high 42 per cent of lodgements and for the first time accounting for more than one in every three mortgages for first home buyers.

The AFG Index recorded more than $13 billion in lodgements in the three months to June 30, representing a 12 per cent increase on the last quarter. Despite the turnaround in the last quarter, the numbers remain 11 per cent down on the same time last year.

AFG Chief Executive Officer David Bailey said, “there are tentative signs of increased activity with both lodgement numbers and volumes up significantly for the quarter. It will be important to see the impact of recent moves by the RBA but we remain cautiously optimistic."

“It remains relatively subdued out there in Victoria and New South Wales, with both states recording an 11 per cent dip on the same time last year, offset by activity in the smaller states,” he noted.

South Australia was ostensibly flat, whilst Queensland and Western Australia recorded slips of thirteen per cent and seven per cent respectively.

Average mortgage size is at an all-time high of almost $515,000, with South Australia the only state to record a drop to now be sitting at $402,473.

Mr Bailey said “with investor lending up, it is interesting to also note the major banks’ responses to the recent cash rate reductions where investor loan rates have seen larger rate cuts passed on to customers. With those APRA-related restrictions now lifted, this could signal a new battleground for customers.

“After a period of slow growth, Refinancers have lifted to 28 per cent, but this is still a long way from the activity seen in 2016 when they recorded levels as high as 39 per cent. Homeowners looking to Upgrade have dropped back to the same level they were at in the final quarter of 2017,” he said.

AFG found, among the non-majors, Macquarie’s market share grew steadily across the quarter and finished June just shy of 10 per cent. ING has also been regaining ground and finished the quarter at four per cent, after dropping to less than two per cent in March.

While among the majors, CBA increased market share to finish June at 18 per cent and NAB finished a tough quarter to reach seven per cent by the end of June. NAB’s gains appear to be at the expense of the Westpac group of brands with Westpac, Bank SA, Bank of Melbourne and St George all recording a fall in market share.

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