Smaller lenders boost market share
Non-major lenders have tripled their market share of new fixed-rate home loans over a nine-month period, according to recent findings by the Australian Finance Group, with ME Bank taking the largest share.
Australian Finance Group's (AFG's) quarterly competition index reveals significant growth in the non-major lenders' share of the fixed rate market between February and November 2013, rising from 13.6 per cent to 42.3 per cent before waning slightly to 38.2 per cent in December.
ME Bank, owned by a number of industry super funds, had the largest increase, peaking at 13.8 per cent of the market share in November 2013.
AFG general manager of sale and operations Mark Hewitt attributes this growth to non-major lenders' focus on targeted service and fixed rate deals to lure in new borrowers.
"2013 saw competition really heating up the market in a way we haven't seen since before the GFC," Hewitt said.
"The non-majors have been agile and focused on service delivery, targeting specific borrowers and using very attractive fixed rate deals to great effect," he said. "While the loan books of major lenders ensure their continued dominance, it is great news for borrowers that they now have much wider choice."
AFG's findings also reveal another milestone for non-major lenders in their overall share of new home loans, which increased from 18.5 per cent in November 2011 to a record 27.7 per cent in November 2013 — the highest figure recorded by AFG in three years of monitoring competition.
A large portion of increased market share for non-major lenders was from borrowers seeking to refinance (35 per cent market share, November 2013) and, significantly, from a 4 per cent growth in their market share among first home buyers.
AUTHOR
Priya Prakash
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