- Published: April 2009
- Region: Australia
Australian Mortgages: Competitive Landscape and Product Innovation
- Published: November 2012
- Region: Australia
This brief is split into two sections. The first presents the strategic context, which considers the key players and their market share, and explores factors that affected their performance. The second chapter provides best-practice examples from around the world, and provides an analysis of how successful they may be with consumers in Australia.
- Understand how the competitive landscape has changed over the last year.
- Examine the strategies of lenders who have successfully increased their market share.
- Discover which lenders are innovating and how they are doing it.
- Understand best practice examples from around the world can succeed in Australia.
- The market share of the top 10 mortgage providers has decreased as smaller lenders, particularly mutuals, have grown their share of the market and increasingly converted into banks. All lenders have had to deal with soft market conditions that have affected margins and profitability.
- The Australian market has consolidated itself, with no new entrants tempted into the market. In August 2012, the top 10 players claimed 96.6% of the market share The majority of that proportion (81.4%) is held by Australia's "big four" banks, which have increased their market share through acquisition.
- Best practice examples stem from CBA, CIBC, Lloyds TSB, Halifax, Nationwide, Standard Chartered, and Ulster Bank.
Reasons to Purchase
- Why have some lenders lost market share while others were able to grow their mortgage books?
- Which players are competing the most heavily for mortgagors and what strategies do they employ?
- How can lenders learn from overseas mortgage providers to better position themselves in Australia’s increasingly competitive market? SHOW LESS READ MORE >
- The Australian market has consolidated itself, with no new entrants tempted into the market- Bendigo and Adelaide Bank's acquisition of Bank of Cyprus boosted its market share
- Westpac relies heavily on brokers, giving the bank an edge in the investor loan segment
- After three tough years, CBA seems determined to recapture market share
- NAB has been able to increase its market share by discounting its rates and compensating early-exit fees
- ANZ targets mortgagors in regional Australia
- Bigger bank lenders' loss of market share can be attributed to mutuals converting into banks- A number of mutuals have become mutual banks
- Recent conversions of mutuals into mutual banks have meant that the credit union and building society sector has seen a significant reduction in the size of its combined loan book value
- Non-bank lenders are having a tough time competing in Australia's mortgage market, while broker usage has increased slightly - Non-bank lenders are trying to recapture market share through the provision of low-documented loans
- Australia's major banks rely less on brokers due to their own extensive client base and network
- M&A activity was strongest in the mutual sector- There has been an increasing amount of consolidation in the mutuals sector
- Compared to the mutuals sector, M&A activity has been moderate in the banking sector
- Mortgages providing peace of mind in an uncertain environment- Ulster Bank offers protection against the risk of falling house prices
- Datamonitor's view: mortgages that protect against price falls provide worried prospective property owners with the certainty to borrow
- Allowing for third-party contributions to address the issue of affordability - Standard Chartered and Lloyds TSB offer to help younger borrowers onto the property ladder
- Datamonitor's view: products that allow several individuals to contribute towards a mortgage will appeal to many younger Australians
- Using mobile applications to create good will - CIBC in Canada and CBA in Australia have launched a property app to assist potential mortgagors with their property searches
- Datamonitor's view: apps designed for customers and non-customers allow banks to target prospective clients early on in the purchasing process
- Using product bundling strategies to entice new customers- Nationwide and Halifax bundle preferential first-time mortgage deals with specific savings accounts
- Datamonitor's view: product bundling strategies allow banks to acquire new mortgage customers while increasing their deposit base
- Gross advances
- Residential mortgage-backed security
- Further reading
- Ask the analyst
- Table: Total housing loans outstanding, market share and growth of Australia's top 10 players
- Table: Home-occupier mortgage rates of Westpac's brands
- Table: Westpac Australian retail banking metrics, September 2011 to September 2012
- Table: CBA (including Bankwest) Australian retail banking metrics, June 2011 to June 2012
- Table: NAB retail banking metrics, September 2011 to September 2012
- Table: ANZ retail banking metrics, September 2011 to September 2012
- Table: Best practice examples
- Figure: Australia's top 10 mortgage lenders (owner-occupied and investor)
- Figure: Westpac's brand positioning
- Figure: CBA offered cash to lure away mortgagors from its competitors
- Figure: Bankwest's branch presence shows the importance of Western Australia for the bank
- Figure: UBank has been able to establish itself in the refinancing segment by undercutting its competitors
- Figure: Mutuals were able to grow their combined loan book by 5.2% between June 2011 and June 2012
- Figure: Broker usage has increased over the last two years
- Figure: Ulster Bank's first-time buyer Momentum Mortgage provides consumers in Northern Ireland with some level of protection against falling house prices
- Figure: Standard Chartered addresses the problem of affordability
- Figure: CBA's and CIBC's property apps assist potential mortgagors
- Figure: Aussie smartphone users have embraced the mobile Internet and apps
- Figure: Nationwide and Halifax are trying to incentivize saving among first-time home buyers
- Figure: Australians saving for a deposit are interested in mortgage bundles
- ASB Bank Limited
- Australia and New Zealand Banking Group
- Canadian Imperial Bank of Commerce
- ERGO Versicherungsgruppe AG
- Hutchison 3G UK Limited
- ING GROEP N.V.
- La Trobe University
- National Australia Bank Group Limited
- Research In Motion Limited