Banks have increased their dominance of the home finance market during 2011 as most other lenders saw their share of the business fall significantly, says leading mortgage broker Priority Lending.
Priority Lending Corporate Spokesperson Paul Smith said the latest official home loan approval figures for December, 2011, from the Australian Bureau of Statistics (ABS) showed a modest growth of 2.3 per cent on the previous month.
Mr Smith said an analysis of the ABA data for the year 2011 found banks boosted their market share by four per cent from 80 per cent in 2010 to 84 per cent last year.
He said non-bank lenders now command just 11 per cent of the home loan market compared to 14 per cent the previous year – a fall of 15 per cent.
“Wholesale lenders had a tough year, losing more than 36 per cent of their business to hold just two per cent of the market,” Mr Smith said.
“However, building societies bucked the trend and slightly increased their market share although they still only have three per cent of the total market.”
Mr Smith said Australians traditionally were loyal to the major banks, particularly in times of economic uncertainty.
But he said more mortgage holders will consider switching to smaller lenders if the major banks raise interest rates independently of the Reserve Bank of Australia (RBA).
“The current high cost of funding and overseas market conditions have prompted some banks to increase their variable home loan rates independently of interest rate decisions by the RBA,” Mr Smith said.
“Borrowers might look to smaller lenders if they can get a better deal. A mortgage broker is best placed to offer advice on the best available home loan options.”
Home loan market share for 2011:
Banks – 84 per cent
Non-bank lenders – 11 per cent
Building societies – 3 per cent
Wholesale lenders – 2 per cent
Source: Priority Lending
