Banks dominate mortgage market

While banks continue to increase their dominance in the mortgage market, a significant number of borrowers still rely on brokers, according to the research by Genworth Financial.

The latest Mortgage Trends report found that there was a lack of competition in the current market with almost all new business coming through the major banks.

Almost 72 per cent of loans are written through banks, up from 68 per cent in 2007, with 16 per cent coming from a non-bank mortgage originator and 9 per cent from a credit union or building society.

Conducted by research group Retail Finance Intelligence, the survey found rising interest rates were having a major impact on how consumers choose a loan, with 50 per cent of respondents indicating price was the most important factor followed by loan flexibility at 44 per cent.

Despite this finding, the number of borrowers relying on brokers to save them time and get them the best deal remained steady at 39 per cent, with a majority of those who used a broker being satisfied (92 per cent).

“Despite some concerns that the Australian mortgage broker industry suffers from a lack of regulation and uniformity, it seems that the vast majority of borrowers who have used a broker are satisfied,” the report said.

Genworth country executive Peter Hall said rising interest rates was the biggest concern for borrowers in meeting their repayments.

“Despite these concerns highlighted through the survey, analysis of our portfolio shows that it still takes a defined event, such as a loss of income or illness, for a borrower to default on their mortgage,” he said.

“However when borrowers are already stretched to capacity, the defined event only has to be small to have serious implications.”