AFG: Mortgage competition heating up

By Leith van Onselen

The Australian Finance Group (AFG) yesterday released its Competition Index for May 2012, which signalled further gains in market share by non-major lenders.

According to the report, non-major lenders 12-months ago accounted for around 22% to 23% of AFG mortgages each month, but this share has risen by 25% to 29% most recently (see below tables).

Of the big four lenders, CBA, ANZ and Westpac appear to be more focused on maintaining profitability than boosting market share, and are therefore moving away from offering large discounts to individual loans, instead focusing more on maintaining the margin in their overall loan books.

As shown by the below graphic, CBA (26.2% share, including Bankwest) has by far the most active in the embattled Queensland housing market, whereas Westpac (29.0%, including Bank of Melbourne) has grabbed the largest share in the past twelve months of Victoria’s toppy housing market. ANZ also has significant exposures to both markets (16.3% and 20.3% respectively in the past year).

The full AFG report is provided below.

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AFG Competition Index May 2012 1

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Comments

  1. All

    The AFG figures and indexes are based on the AFG broker book and not all mortgages originated in Australia. So whilst it may be representative I’m sure the margin of error in the detail could be significant

    • Agreed – there will be a margin of error.
      Nevertheless it’s not hard to understand some drift away from the big four and their subsidiaries in a period where they have had some negative press, and they are not at the forefront of rate discounting.

  2. The big players are not offering the discounts that they once did.

    Sounds like the pricing of lending has become less competitive not more competitive to me!

  3. Alex Heyworth

    The thing that amazed me about the tables was how low the NAB share was, and how high the Suncorp share was.

    That looks like a very big (and risky) bet by Suncorp.

    • Alex – the NAB prefer that brokers put their loans through Homeside, so you need to add those two together to get the true NAB share.

      If you are referring to FTB’s the Suncorp understands that they are usually a trouble free segment, so they are actually diminishing their risk.