Amid tough competition among lenders and record low interest rates, more and more Australians are turning to small and mid-tier banks to refinance their home loans, according to the latest data from Australian Finance Group (AFG).
“The non-majors lifted their share of the refinancing market to 43.2% across the last quarter,” said Mark Hewitt, general manager of sales and operations at AFG. “Suncorp, with an increase of 3.3%, and AMP with a lift of 2.1% led the way with refinancers, largely at the expense of the Westpac stable.”
AFG defines “major banks” as the Big Four and their counterparts/subsidiaries, while “non-majors” include AMP and Suncorp, as well as non-bank lenders and customer-owned banks.
With the major banks increasing their fixed and variable interest rates and tightening their lending to investors in response to a crackdown by APRA, customers are motivated to seek more competitive rates and greater savings through their brokers.
“You can see there is a lot more competition in the market than there was 18 months ago,” Hewitt said. “We're seeing the non-majors pick up some of the slack.”
According to Peter White, executive director of the Finance Brokers Association of Australia (FBAA), more Aussies were turning to non-bank lenders for finance, with companies such as Pepper Group, Liberty Financial, and La Trobe Mortgage Corporation gaining a bigger chunk of the market.
“The non-bank sector is a lot more agile and of course isn't directly controlled by APRA because they are not banks,” said White. “They have a greater degree of flexibility to take on risk.”
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