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Increasing numbers of investors and home buyers are choosing non-bank lenders to finance their property purchases, sales figures from mortgage broking group AFG have revealed.
The market share of non-bank lenders rose in February to levels not seen since before the global financial crisis, the broker said, with the sector comprising around 21 per cent of all home loans processed by the group during the month.
The figures continue a trend apparent in Australian Bureau of Statistics figures showing that the market share of non-bank lenders increased to 15.4 per cent in the December quarter, double its lowest level of 7.5 per cent in the first quarter of 2009, AFG said.
But while investors and home buyers may be benefiting from increased competition in the mortgage market now, AFG general manager of sales and operations Mark Hewitt, warned the trend could be short lived if the government succeeds in banning exit fees.
“The ‘Bank Wars’ are definitely good news for consumers as lenders compete on rates, upfront fees and policy,” he said.
“We’re seeing lenders once again offering up to 95 per cent of property values as they try to attract very cautious consumers back into the market.
“But this welcome outbreak of competition is being completely overshadowed by the threat of a Deferred Establishment Fee (DEF) ban. If such a ban comes into effect, non-bank lenders will be badly disadvantaged and consumers could find their options rapidly evaporate.’
The federal government appears determined to press on with the exit fee ban despite criticism from all angles that the move will damage competition, as opposed to improving it.
Just yesterday Westpac chief Gail Kelly said the proposed ban was “poor public policy”, according to The Australian, with smaller lenders certain to struggle as a result.