Smaller lenders are grabbing a bigger share of mortgage customers as the home loan market continues to set new records.
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."