Smaller lenders get bigger share of loan deals
Non-bank home-loan groups increased lending by twice the pace of banks in October as the mortgage sector continued to pick up speed, figures show.
As low interest rates fire up the property market, the value of new loans reached a record of almost $22 billion in October.
"The latest housing finance figures add to the body of evidence showing a significant response from the housing market to the RBA's stimulatory policy stance," Deutsche Bank chief economist Adam Boyton said.
Last week, official housing finance figures showed the number of home loan approvals for owner-occupiers rose by 1 per cent in October to 52,305. The number of mortgages sold by banks increased by 0.9 per cent, while those approved by non-bank lenders rose by 2.3 per cent.
The term "non-banks" refers to specialist home loan lenders, building societies and credit unions. While smaller lenders made some headway, banks still accounted for 93 per cent of all loans in October.
In a submission to the government, the Customer Owned Banking Association, which represents credit unions and building societies, said the big banks' dominance should be looked at.
"Our four major banks are among the world's 20 largest banks. Around 50 per cent of all Australian household deposits are held by just two of the majors - CBA and Westpac. The majors have increased market share and market power significantly," the submission says.
Australian Bureau of Statistics figures show the value of all new loans in October rose by 4.8 per cent to $21.9 billion, a record.
Investors were responsible for most activity in the home-loan market in October, while first home buyers accounted for only 12.6 per cent of mortgage approvals.
Many first home buyers are being priced out of the market as house prices rise.
"The RBA needs to hope that pent-up demand for established homes, which is pushing up house prices, particularly in Sydney, will run its course over the next few months," Citigroup economist Paul Brennan said. "There are some early signs that increased supply is capping auction clearances, though at very elevated levels."
Frequently Asked Questions about this Article…
Smaller lenders, including non-bank home-loan groups, are gaining a bigger share of the mortgage market because they have increased lending at twice the pace of banks. This trend is occurring as the home loan market continues to grow, driven by low interest rates that are stimulating the property market.
Non-bank lenders, such as specialist home loan lenders, building societies, and credit unions, play a significant role in the mortgage market by providing alternatives to traditional banks. They have been increasing their share of mortgage approvals, although banks still dominate the market.
Low interest rates have fired up the property market, leading to a record value of new loans. This environment encourages more borrowing and investment in real estate, contributing to the growth of the mortgage market.
The home loan market in Australia is experiencing significant growth, with the value of new loans reaching a record high. Both banks and non-bank lenders are seeing increased activity, although non-bank lenders are growing at a faster rate.
Major banks in Australia are highly dominant, accounting for 93% of all loans in October. They hold significant market power, with two of the largest banks, CBA and Westpac, holding around 50% of all Australian household deposits.
First home buyers are facing challenges in the current market due to rising house prices, which are pricing many out of the market. They accounted for only 12.6% of mortgage approvals in October, indicating the difficulties they face in securing loans.
Investor activity is driving much of the growth in the home loan market, with investors responsible for most of the activity in October. This trend contributes to the rising demand and competition in the property market.
Economists hope that the pent-up demand for established homes, which is pushing up house prices, will ease in the coming months. There are early signs that increased supply may be capping auction clearances, although they remain at elevated levels.
Call 1300 880 160
Start a chat
Schedule a call
