Home buyers embrace non-bank lenders

Home buyers are turning to non-bank sources for finance, often opting to refinance their loans with regional banks and smaller lenders to get the best deal, figures from the Australian Bureau of Statistics reveal.

ABS data shows that almost all of the growth in home lending over the past 12 months came from home buyers swapping mortgage loans to obtain lower interest rates. From June to September 2002, 5,936 borrowers refinanced their mortgages, a 40 per cent rise on the same period in 2001.

The banks' share of the home lending market dropped to around 75 per cent from 78 per cent in 2001. In the early 1990s, the banks dominated home lending with 90 per cent of the market.

But Aussie Home Loans' John Symond said the latest figures mask the true extent of the banks' hold on the housing finance market, as third-party mortgage brokers have gained in popularity and they are technically classed as “other lenders”. The banks are clawing their way back through closing branches and using these third-party intermediaries to increase their distribution, Mr Symond said.