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search - Draws upon a large Datamonitor consumer survey to gain insights into the
current mindset of the Australian mortgagor.
- Includes market overview, analysis of competitors and outline of future
developments.
- Provides three scenario forecasts for lending commitments in Australia
until 2013.
Research and analysis highlights
Lending commitments have grown strongly over the last ten years, but dipped in
the first half of 2008. In July 2000 lending commitments of A$7.5 billion were
granted, and in July 2009 A$22.5 billion of lending commitments were granted,
representing a CAGR of 12.9% over the period.
First home buyer activity has surged as a result of government subsidies and a
low interest rate environment. The absence of non-bank lenders and a consumer
preference for the perceived safety of large domestic banks led to
opportunities for the largest four banks.
Satisfaction levels have converged between different financial institutions in
the last year. In both 2008 and 2009, NAB was the lowest rated bank in terms
of proportion of quite or very satisfied mortgagors, and ANZ was the highest
rated, but the difference between the institutions was greater in 2008.
Key reasons to purchase this research
- Plan your future strategy with confidence using Datamonitor' s
scenario-based forecasts of Australian lending commitments until 2013.
- Understand the challenges the mortgage industry is facing, as well as the
opportunities, at this pivotal time.
- In-depth analysis of how Australian providers approach different issues,
allowing you to reassess your strategy.
Table of Contents
OVERVIEW
EXECUTIVE SUMMARY
- Market sizing and key issues
- 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