Non-bank lenders lose slice of mortgage pie

By Stephen Johnson, AAP, 18 July 2009

NON-BANK lenders have seen their share of the home loan market slashed by two-thirds in the past year as the global credit crunch funnelled borrowers back to traditional mortgages.

The banks now have a lock on nine out of 10 mortgages even though they have raised their standard variable lending rates independently of the Reserve Bank (RBA).

Mortgage originators including the big banks are tipped to phase out 12-month introductory discount interest rate loans as world financial conditions tighten.

Government data shows that wholesale lenders, which are mainly in the non-bank sector, comprised 4 per cent of housing finance in May, down from 13 per cent a year earlier.

Conversely, banks commanded 90 per cent of the $13.6 billion home loan market in the same month, up from 79 per cent in May 2007, Australian Bureau of Statistics lending finance figures out this week showed.

Permanent building societies saw their share of the mortgage market almost halve, to 1.5 per cent from 2.8 per cent, in the same period, while credit unions were not as hard hit.

CommSec equities economist Savanth Sebastian said tighter global credit conditions would benefit banks at the expense of non-bank lenders.