Australia’s big banks wrote 92.5% of all housing finance in May – the highest figure ever recorded since the Australian Bureau of Statistics started tracking mortgage lending figures in 1992.
The increase in market share largely comes at the expense of the non-bank market, which wrote 1.2% of mortgages in May – a significant drop from 2003 when it peaked at 15.2%.
Mutuals collectively wrote 6.3% in May – 4.3% of which was written by credit unions, while building societies wrote 2.0%. Almost two decades ago, mutuals were writing 10.2% of new home loans.
The drop in non-bank lending is a bullet to competition, according to the nation’s peak industry body for mortgage brokers.
The Mortgage & Finance Association of Australia indicated that bank dominance means higher interest rates for home loan customers. The standard variable rate average for the four major banks in May was 7.79%, while for credit unions the SVR average was 7.32% and non-banks it was 7.01%.
“The figures tell us that the non-bank lenders are the most competitive when it comes to interest rates, yet they are being squeezed out of the market,” said MFAA CEO Phil Naylor.
Naylor called on the government to take a closer look at the Canadian model which guarantees competitively priced funding pools accessible by non-bank lenders.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan