Non-bank lenders win bigger share of mortgage market

AUSTRALIA’S big four banks are being given a run for their money with rival mortgage lenders snatching a greater share of the home loan market.

New statistics show the smaller lenders have become more attractive to borrowers, particularly those wanting to refinance home loans or buy their first home.

Non-bank lenders clinched nearly a quarter of the overall mortgage market by December 2011, figures released yesterday by mortgage broker AFG showed.

The result was a sizeable jump from November, when smaller lenders held about a 20 per cent share of all home loans.

Driving the shift was a rise in the number of borrowers refinancing home loans with a non-bank lender.

By the end of 2011, the non-bank lenders had lifted their share of the refinancing market from 21 to 28 per cent. They also remained attractive to first home buyers, with 28 per cent of that market shunning the big banks.

Mortgage experts said people looking to refinance home loans had traditionally been drawn to the major banks, while first time buyers were more willing to try smaller players.

The general manager of sales and operations at AFG, Mark Hewitt, said he expected the trend to continue and competition to intensify if interest rates continued to fall.

”We could see a very different lending environment, supporting the recovery of property markets across Australia,” he said.

The Reserve Bank cut interest rates in November and December and most analysts expect further reductions in 2012.

The chief operating officer at mortgage broker Loan Market, Dean Rushton, said first home buyers had been buoyed by the recent rate cuts and they were likely dominate the housing finance market this year.

”2011 was a savings year for many potential home owners and with the likelihood of further interest rate reductions and softened property prices, 2012 appears to be primed for first home buyers to enter the market,” Mr Rushton said.

He said first home buyers looking toward investment properties as their way into the property market could also emerge a growing force.

AAP