The country’s largest banks are consolidating their lead over smaller rivals, growing their share of the ultra-competitive mortgage refinancing market even though it is damaging returns.
The country’s largest banks have grown their share of the ultra-competitive mortgage market, as they fight for their share of $360 billion inEquifax data showed ANZ Bank, Commonwealth Bank of Australia, National Australia Bank and Westpac are winning what has become a fierce battle for loan refinancing share, as new mortgage lending growth stabilised at less than half the rate seen in December 2021.
“The drop in refinancing enquiry amounts suggests that consumers are minimising their debts and borrowing less as interest rates rise, rather than adding a bit extra to their mortgage to cover expenses like renovations,” Mr Moses said.The first signs of bad debts in the economy are starting to materialise.
“For example, many variable rate customers who were previously making above minimum repayments are now seeing a larger interest component and smaller principal paydown,” he said.Soaring interest rates have also pushed up mortgage delinquencies from extremely low levels. In its latest securitisation report, NAB said arrears for non-conforming loans had jumped by more than prime mortgages, but actual losses remained at low levels.
“Yet the banks have ample liquidity and will maintain good access to funding markets. The banks’ asset quality will also remain strong, though with modest deterioration, supported by a tight labour market and prudent risk management. Rising rates will support banks’ profitability but also raise funding costs and dampen loan growth.”
The research showed that Sydney residents need to earn $239,480 to comfortably afford the repayments on a house, based on CoreLogic’s latest median property value for March.“However, this wage falls $145,350 short of the average annual before-tax earnings of $94,130 in the harbourside city,” said Ms Zahos.
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