Invest
Nation turns back on bank home loans
Aussies turned in droves to the non-bank sector for home loans last year, as banks tightened their credit offerings and customer satisfaction fell throughout the royal commission.
Nation turns back on bank home loans
Aussies turned in droves to the non-bank sector for home loans last year, as banks tightened their credit offerings and customer satisfaction fell throughout the royal commission.
According to Standard & Poor’s (S&P) latest report, the non-bank sector issued 60 per cent of home loans in 2018, skyrocketing from 31 per cent the year prior.
In its Structured Finance Outlook 2019 report, the ratings agency stated that it expected alternative lenders to continue to “dominate” the home loan sector in 2019, as APRA’s strong lending standards continue to take a toll on authorised deposit-taking institutions (ADIs).
“Many Australian bank issuers remained on the sidelines in the past year, leaving the non-bank sector to pick up the slack,” S&P noted.
“Even as home-lending growth slowed to around 5 per cent, the non-banks were able to achieve lending growth rates more than double their banking peers by capitalising on a tightening of lending standards in the [ADI] sector.”
However, the ratings agency said that although the non-bank sector’s proportion of lending has significantly increased, the residential segment is remaining less than 5 per cent of total mortgages.
It suggested that although APRA has lifted its 30 per cent cap on interest-only lending, the move is unlikely to signal an increase in investor home loan adoption over the short term as many lenders will continue to strengthen their practices ahead of the release of the royal commission’s final report.
“Many lenders are applying greater scrutiny to expenses in their debt-serviceability assessments, and this is tightening many borrowers’ access to finance,” S&P stated.
“Lending standards are likely to remain more stringent in the wake of the publication of the final report on the royal commission findings, which is due to be released in February 2019.”
Customer satisfaction low during the royal commission
S&P’s findings reflect data released by Roy Morgan in the midst of the royal commission, which found that satisfaction with banks overall declined.
The research house’s August Customer Satisfaction-Consumer Banking report found that the big four banks each experienced drops in customer satisfaction, with NAB down 3.9 percentage points, Westpac down 3.6, ANZ down 2.7 and CBA down 2.5.
This has sparked millions of Aussies to look towards new providers in the non-major segment.
RELATED ARTICLES
Property
Rents Are Repricing Australia Inc: What record‑low vacancies mean for inflation, talent and strategy
Australia’s rental market has slipped into a vacancy desert, and it’s not just tenants feeling the heat. Persistently tight supply is pushing up rents, embedding services inflation and complicating ...Read more
Property
Young buyers poised for a comeback as 5% First Home Guarantee takes effect
In a move set to reshape the Australian property landscape, the government’s revamped First Home Guarantee is poised to open the doors of homeownership to a new generation of young AustraliansRead more
Property
AFG Securities waives settlement fees for first-home buyers, signalling strategic shift
In a strategic move aimed at easing the financial burden on first-home buyers, AFG Securities has announced the elimination of settlement fees on select loans, potentially saving customers up to $699Read more
Property
From trust woes to wealth: Australian agencies' secret to boosting prices
In Australia’s residential market, trust is no longer a nice-to-have—it’s a pricing variable. Persistent distrust of real estate agents is depressing vendor outcomes and inviting regulatory heat, but ...Read more
Property
Reality check for first home buyers: Affordable suburbs with 5% deposit
In a significant development for Australian first home buyers, a new property search tool from Aussie Home Loans is set to transform the way prospective homeowners approach the market. As the Federal ...Read more
Property
Trust as a performance multiplier in Australia's real estate market
In Australia’s A$10–11 trillion housing market, trust is emerging as a crucial factor that sellers and agencies can no longer afford to overlook. Traditionally viewed as a soft metric, trust is now ...Read more
Property
LJ Hooker Lake Macquarie makes a splash with Belmont buy as real estate consolidation looms
LJ Hooker Lake Macquarie’s acquisition of the Belmont office, including its rent roll, is less about shopfronts and more about balance‑sheet resilience. In a market where listings ebb and flow with ...Read more
Property
Twice the demand: the case study behind Melbourne’s first‑home buyer surge
Melbourne has quietly engineered one of Australia’s most consequential housing turnarounds, with first‑home buyer demand running at roughly double the national pace and four of the top five buyer ...Read more
Property
Rents Are Repricing Australia Inc: What record‑low vacancies mean for inflation, talent and strategy
Australia’s rental market has slipped into a vacancy desert, and it’s not just tenants feeling the heat. Persistently tight supply is pushing up rents, embedding services inflation and complicating ...Read more
Property
Young buyers poised for a comeback as 5% First Home Guarantee takes effect
In a move set to reshape the Australian property landscape, the government’s revamped First Home Guarantee is poised to open the doors of homeownership to a new generation of young AustraliansRead more
Property
AFG Securities waives settlement fees for first-home buyers, signalling strategic shift
In a strategic move aimed at easing the financial burden on first-home buyers, AFG Securities has announced the elimination of settlement fees on select loans, potentially saving customers up to $699Read more
Property
From trust woes to wealth: Australian agencies' secret to boosting prices
In Australia’s residential market, trust is no longer a nice-to-have—it’s a pricing variable. Persistent distrust of real estate agents is depressing vendor outcomes and inviting regulatory heat, but ...Read more
Property
Reality check for first home buyers: Affordable suburbs with 5% deposit
In a significant development for Australian first home buyers, a new property search tool from Aussie Home Loans is set to transform the way prospective homeowners approach the market. As the Federal ...Read more
Property
Trust as a performance multiplier in Australia's real estate market
In Australia’s A$10–11 trillion housing market, trust is emerging as a crucial factor that sellers and agencies can no longer afford to overlook. Traditionally viewed as a soft metric, trust is now ...Read more
Property
LJ Hooker Lake Macquarie makes a splash with Belmont buy as real estate consolidation looms
LJ Hooker Lake Macquarie’s acquisition of the Belmont office, including its rent roll, is less about shopfronts and more about balance‑sheet resilience. In a market where listings ebb and flow with ...Read more
Property
Twice the demand: the case study behind Melbourne’s first‑home buyer surge
Melbourne has quietly engineered one of Australia’s most consequential housing turnarounds, with first‑home buyer demand running at roughly double the national pace and four of the top five buyer ...Read more
