The big four banks, NAB, Westpac, ANZ and the Commonwealth, still have their fingers on the home loan pulse. But, smaller non-bank lenders, such as building societies, credit unions and specialist home lenders, are gaining a larger share of the home loan market.
Mortgage sources report that non-bank home loan lenders doubled their lending pace at the end of 2013 and are expected to continue these increases during 2014. Record low interest rates are anticipated to add fuel to the already smouldering mortgage fire as the value of new home loans reached record highs of $22 billion in October of 2013.
The value of new home loans rose by 4.8 percent, with investors being ‘the most responsible’ for increased home loan activity. While 1st home buyers accounted for 12.6 percent of approvals, many were being priced out of the market as home prices rose.
The latest housing finance figures, according to economists, shows a significant housing market response with a 1 percent increase in home loan approvals to 52,305 loans in October of 2013. At this time, the number of non-bank mortgages rose by 2.3 percent compared to bank home loans of .9 percent. But, in saying this, banks still account for more than 90 percent of all home loans held during the month of October.
Australia’s big four banks are said to be amongst the 20 largest banks in the world. The CBA and Westpac hold around 50 percent of all Australian household deposits. Financial experts say that the majors have increased their market share and power greatly over the last 12-months. This has prompted independent banking associations to request that the Australian government review the dominance of banks in Australia.
The bank market share is said to have grown since the Global Financial Crisis (GFC). This, say economists, was due to a lack of consumer confidence in the non-bank sector at the time. Many borrower’s sought ‘assurance of safety’ as they feared their investment wouldn’t be protected.
However, times are changing. The threat of the GFC is passing and consumer’s who were disenchanted in the non-bank sector are beginning to return. In fact, many borrower’s are said to be bitter towards banks as they feel they’ve taken advantage of the lack of competition by not lower interest rates and raising lending criteria. This bitterness is also said to be increasing interest in non-bank mortgages
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