Big banks are dominating this mortgage market

Big banks and other ADIs are dominating the owner-occupier mortgage segment – the only part of the lending sector to show any significant growth this year, according to a report from Banking Day.

Lenders’ owner-occupier mortgage balances rose 0.4% month over month in October, and 5.4% year over year, according to the latest data from the Reserve Bank of Australia. 

Housing investor loan balances rose 0.1% month over month and were down 0.3% year over year. Overall, housing loan balances grew 3.3% over the 12 months to October.

Personal credit balances fell 12% over the 12 months, and business credit balances crept up by just 1.4%, Banking Day reported.

AFG had a record month in October, with lodgments of $6.7 billion, up 16% year over year, chief executive David Bailey told shareholders last week at the company’s annual general meeting. Bailey said that first-home buyers accounted for 23% of activity – and 65% of first-home buyer loans were written by the major lenders.

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Overall, the majors currently account for 60.1% of the loans being arranged by AFG brokers – a spike from 52% 12 months ago, Banking Day reported.

“Non-ADIs’ ability to compete and retain existing customers in the residential mortgage market is being negatively impacted by the very low funding pricing available to ADIs through the Reserve Bank’s term funding facility support package,” Bailey said.

However, recently released APRA lending data shows that not all of the big banks have benefited from these conditions, Banking Day reported. While both ANZ and Commonwealth Bank have grown their mortgage books above system over the past year, Westpac and NAB have continued to slide.

Westpac’s mortgage book has shrunk by 1.1% over the last 12 months, while NAB’s book has shrunk by 0.5%.

Other ADIs reporting above-system growth include Bank of China, Bendigo and Adelaide Bank, HSBC Australia and Macquarie Bank, Banking Day reported.