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- The Australian mortgage market has grown strongly over the last decade
- First time buyers have become a yet more important customer segment
- Fixed rates are primarily used as a form of insurance

Competitor market shares and developments
- CBA and Westpac have tightened their grip on the mortgage market
- Each major banks' mortgage customers have distinct attributes
- The interest rate is a prime driver of customer acquisition
- Mortgage stress is common for Australian mortgagors despite low default rates

Customer acquisition and retention strategies
- Mortgage innovation is slowly picking up in the Australian market
- Mortgage brokers and the internet channel will continue to grow in importance
- Institutions need to provide a smooth and seamless customer experience

MARKET SIZING AND KEY ISSUES

The Australian mortgage market has grown strongly over the last decade
- Outstanding housing credit now exceeds A$1 trillion
- Outstanding credit has continued to grow in the last two years despite an uncertain economic environment
- Lending commitments have grown over the last decade but fell in early 2008
- Lending commitments bounced back in early 2009 as a result of strong first time buyer demand
- Housing leverage has increased
- Property prices have risen and converged between state capitals
- Household mortgage fees yield over A$1 billion for Australian banks
- Mortgage lending is forecasted to grow to A$331 billion by 2013

First time buyers have become a yet more important customer segment
- First time buyers have propped up the mortgage market
- Investor market activity has abated somewhat since its 2003 peak
- Refinancing activity has stabilized after a long period of growth
- Most mortgagors expect to keep their mortgage with their current provider for 10 years or more
- Most mortgagors had over 10% deposit when taking out their main mortgage

Fixed rates are primarily used as a form of insurance
- Interest rates have fallen since their 2008 peak
- Average fixed rates exceed average standard rates as the markets expect a rising cash rate
- Mortgagors are more likely to fix their mortgage rate when interest rates are high

COMPETITOR MARKET SHARES AND DEVELOPMENTS

CBA and Westpac have tightened their grip on the mortgage market
- CBA continues its dominance as the largest individual brand for mortgages
- CBA and Westpac combined hold a 46% market share of outstanding Australian mortgages
- CBA and Westpac have had success with the first home buyer segment by providing perceived security

Each major banks' mortgage customers have distinct attributes
- NAB customers are more likely to have investment properties and several mortgages
- St.George has a strong presence in basic mortgages
- ANZ customers are more likely to have used a mortgage broker
- CBA has the highest proportion of new mortgagors
- Westpac customers perceive themselves as more loyal
- NAB has effectively cross-sold other financial products to its mortgage customers

Perceived safety affects cross-selling and choice of rate type
- CBA and NAB customers are especially likely to have several different products with the institution
- CBA has benefitted from cross-selling mortgages to transaction account customers
- St.George customers are the most likely to have a fixed rate loan

Mortgage stress is relatively common for Australian mortgagors despite low default rates
- ANZ customers are the most likely to express currently experiencing mortgage stress
- CBA customers are the most likely to expect future mortgage payments to become difficult
- 44% of ANZ mortgagors claim to have cut back on luxury spending to afford their mortgage
- ANZ mortgagors are more likely to incur further debt and look to sell property
- Satisfaction with mortgage providers has fallen and converged between providers

CUSTOMER ACQUISITION AND RETENTION STRATEGIES

Institutions need to provide a smooth and seamless customer experience
- The backlog of mortgage applications has highlighted the importance of turnaround times
- Multiple products held with the same institution can offer both advantages and disadvantages
- Increasing competition will ensure pricing remains a key aspect driving consumer choice

Mortgage innovation is slowly picking up in the Australian market
- Bankwest has launched a capped rate product
- ING DIRECT is launching a new offset product through the broker channel
- Macquarie Bank is considering reentering the market
- There is room for further innovation in Australia based on UK experiences

Mortgage brokers and the internet channel will continue to grow in importance
- The broker channel will be a key focus for incumbents and new entrants alike
- The internet channel will continue to slowly grow in importance

APPENDIX

Supplementary data
Definitions
- Balances outstanding
- CAGR
- Cash rate target
- Gross advances
- Lending commitments
- Mortgage manager
- Mortgage offset account
- Non-conforming

Methodology
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer

TABLES

Table: Outstanding housing loans on the books of banks, August 2009
Table: Outstanding housing loans on the books of banks, August 2009
Table: Cross-selling to mortgage customers, April 2009
Table: CBA customers are the most likely to have different financial products with CBA, April 2009
Table: Cross-selling to mortgage customers, April 2009
Table: Fixed rate schedule for different combinations of LTV and loan fixed term at Nationwide
Table: Fixed rate schedule for mortgages with a two year fixed rate at Nationwide
Table: Household credit aggregates, January 2000 - July 2009
Table: Housing credit aggregates, January 2000 - July 2009
Table: Monthly housing lending commitments, January 2000 - July 2009
Table: Total housing debt to housing asset ratio, March 2000 - March 2009
Table: Aggregate interest payments to income ratio, March 2000 - June 2009
Table: Monthly amount paid on main mortgage, April 2009
Table: Price index of established homes in the capital cities, March 2004 - June 2009
Table: Median price of established house transfers in five capital cities, March 2004 - December 2008
Table: Bank mortgage fees from households, 2000 - 2008
Table: Housing lending commitment forecasts, 2000 - 2013f
Table: First time buyer proportion of owner-occupier lending commitments, January 2000 - July 2009
Table: Monthly lending commitments, January 2000 - July 2009
Table: Investor proportion of lending, January 2000 - July 2009
Table: Refinancing as a proportion of owner-occupier lending commitments, January 2000 - July 2009
Table: Time held main mortgage with current mortgage provider, April 2009
Table: Time mortgage is expected to be held with current provider, April 2009
Table: Deposit when taking out main mortgage, April 2009
Table: Source of deposit for main mortgage, April 2009
Table: Cash rate target, January 2000 - October 2009
Table: Average bank mortgage rates, January 2004 - August 2009
Table: Rate type of main mortgage, April 2009
Table: Fixed rate proportion of owner-occupier lending commitments, January 2000 - July 2009
Table: Provider of main mortgage, April 2009
Table: Outstanding housing loans on the books of banks, August 2009 hWww Bestmortgageremortgages Best Mortgage ReMortgages Forex Szh Page Hotel%E7%9A%84%E5%B0%91%E5%B9%B4%E5%AC%89%E6%88%B2 Best Mortgage ReMortgages 澳洲房贷市场 - GIIy p z ReMortgages Best Mortgage ReMortgages cWww Bestmortgageremortgages Best Mortgage ReMortgages Forex Szh Page Hotel%E7%9A%84%E5%B0%91%E5%B9%B4%E5%AC%89%E6%88%B2 Best Mortgage ReMortgages 澳洲房贷市场 - GIIk Best Mortgage ReMortgages