Banks increase mortgage market share

Australia's big four banks have increased their market share in the mortgage space, according to mortgage broker, AFG.

It said the major banks and their subsidiaries had done this by taking advantage of improved

pricing conditions and their significant balance sheets.

Releasing the AFG quarterly Competition Index this week, the company said the share of loans processed by the company for major lenders increased from 75.7 per cent in September last year to 79.4 per cent last month.

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"Driving the market share increase was major lenders' success in out-pricing their much smaller rivals in fixed rate loans — a product category that has soared in popularity in recent months," the AFG analysis said.

It said the major lenders accounted for 76.4 per cent of all fixed rate loans in September last year.

It said particular winners included ANZ, which saw its fixed rate loan share rise from 8.7 per cent to 15.1 per cent during the period, Bankwest, which increased from 1.2 per cent to 5.0 per cent and Commonwealth Bank, which grew from 18.0 per cent to 21.1 per cent.

Commenting on the index, AFG general manager of sales and operations, Mark Hewitt said the scale of the major lenders had given them an inherent advantage in sourcing funding.

"As the figures show, they've been able to leverage that advantage to the point that they now account for four out of every five new home loans overall," he said. 

"While this is good news for the majors, it's bad news for consumers who are deprived of the more competitive pricing they would enjoy if we had the same levels of competition seen in other developed economies."

He said the major lenders had made especially deep inroads into the first home buyer market.