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• 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
• Table: Market shares of outstanding mortgages, August 2009
• Table: Number of different financial products held with each institution by its customers, April 2009
• Table: Number of mortgages held by customers with different main mortgage providers, April 2009
• Table: Investment properties held by customers with different main mortgage providers, April 2009
• Table: Monthly amount spent on main mortgage, April 2009
• Table: Features of main mortgage, April 2009
• Table: Current size of main mortgage, April 2009
• Table: Current size of main mortgage, April 2009
• Table: Proportion of main mortgage customers that used broker for main mortgage, April 2009
• Table: Sources of information used when choosing main mortgage provider, April 2009
• Table: Propensity to use mortgage broker for new mortgage, April 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: Reasons for choosing main mortgage provider, April 2009
• Table: Rate type of main mortgage, April 2009
• Table: Proportion that agree or strongly agree with different attitude statements, April 2009
• Table: Deposit when taking out main mortgage, April 2009
• Table: Sources of deposit for main mortgage, April 2009
• Table: Difficulty of keeping up repayments on main mortgage for the next five years, April 2009
• Table: Proportion that agree or strongly agree with mortgage stress reaction questions, April 2009
• Table: Satisfaction with main mortgage provider, 2008 - 2009
• Table: Satisfaction with main mortgage provider, April 2009
• Table: Proportion that is satisfied or very satisfied with main mortgage provider, 2008 - 2009
• Table: Mortgage broker usage, April 2009
• Table: Top reasons for wanting to use mortgage broker, April 2009
• Table: Top reasons for not wanting to use mortgage broker, April 2009
• Table: Propensity for using the internet to arrange mortgage, 2008 - 2009
• Table: Obstacles to arranging products over the internet, April 2009

FIGURES

• Figure: Consumers tend to fix their rates at interest rate peaks, January 2004 - July 2009
• Figure: CBA and Westpac hold 46% of outstanding household mortgages, August 2009
• Figure: Housing credit aggregates reached A$1.0 trillion in July 2009, January 2000 - July 2009
• Figure: Owner-occupier housing credit aggregates reached A$733 billion in July 2009, January 2000 - July 2009
• Figure: Housing credit aggregates have grown smoothly over the last two years, July 2007 - July 2009
• Figure: Lending commitments fell in early 2008, January 2000 - July 2009
• Figure: Monthly lending commitments recovered in early 2009, July 2008 - July 2009
• Figure: In March 2009 housing debt to housing assets exceed 30%, March 2000 - March 2009
• Figure: Interest payments as a proportion of disposable income fell recently, March 2000 - June 2009
• Figure: Mortgagors commonly pay A$1,000 - 1,499 on their main mortgage, April 2009
• Figure: Property prices rose sharply between 2006 and 2008, March 2004 - June 2009
• Figure: Property prices in state capitals have converged, March 2004 - December 2008
• Figure: Banks accrued over A$1 billion in household mortgage fees in 2008, 2000 - 2008
• Figure: Lending commitments are forecasted to recover over the next five years, 2000 - 2013f
• Figure: First home buyers reached a peak in May 2009, January 2000 - July 2009 lWww Bestmortgageremortgages Best Mortgage ReMortgages Forex Szh Page Jerry Olasakinju Best Mortgage ReMortgages 澳洲房贷市场 - GIIg Best Mortgage ReMortgages m Best Mortgage ReMortgages j j Best Mortgage ReMortgages Best Mortgage ReMortgages fWww Bestmortgageremortgages Best Mortgage ReMortgages Forex Szh Page Jerry Olasakinju Best Mortgage ReMortgages 澳洲房贷市场 - GIIs p p Best Mortgage ReMortgages Best Mortgage ReMortgages Best Mortgage ReMortgages