‘Big four’ clean up
The ‘big four’ banks are reaping the rewards in the wake of the US sub-prime market crisis, as concerned borrowers look to the perceived security offered by major banks.
National brokerage firm, Smartline’s latest quarterly report revealed that the major banks accounted for 67 per cent of all new home loans generated by Smartline Group’s 146 franchise operators across Australia.
Smartline managing director Chris Acret said the banks were aggressively recapturing market share by capitalising on the market uncertainty caused by two major events in the September quarter: the August interest rate rise and the start of the meltdown of the US sub-prime market.
According to Acret, both events have had a direct impact on the products Australian consumers are choosing for their home loans.
“The collapse of the US sub-prime mortgage market has received considerable media attention in Australia. While we believe the Australian mortgage market is protected to an extent from these developments, particularly given our strong lending standards, it has nevertheless impacted on consumer sentiment in the Australian mortgage market,” Acret said.
Acret said the data revealed that the interest rate rise has not had a serious impact on the market overall, with Smartline application numbers increasing over the period.
“We are also seeing more clients opting for variable rates, with fixed rate loans representing just 19 per cent of all new loans in the September 2007 quarter compared with 26 per cent six months ago. This indicates an overall confidence that the interest rate cycle is at or near its peak.”
The withdrawal of certain non-bank lending products has also been attributed to the consumer trend towards the ‘big four’ which has “affected the confidence of many consumers, and some mortgage brokers, resulting in more borrowers seeking the perceived safety and security of the ‘big four’”, Acret said.
“If this trend continues, it could represent a fundamental change in the market, given that the non-bank lenders have led the way over the last few years, capturing customers with innovative products and reduced rates and fees.”
The report showed the Commonwealth Bank continued to lead the market, with Westpac and ANZ competing head-to-head in the professional package space.
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