Australian Mortgage Council...Consumer sentiment 17 The Westpac-Melbourne Institute Consumer...
Transcript of Australian Mortgage Council...Consumer sentiment 17 The Westpac-Melbourne Institute Consumer...
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Australian Mortgage Council
For questions and enquiries, please contact:
• Julien Wilson, [email protected]
• Phone, +612 9126 2623
Analyst: Nitish Bhatt
March 2019 Survey – Generic
1
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A U S T R A L I A N M O R T G A G E C O U N C I L
• The Australian Mortgage Council (AMC) is a quarterly survey conducted online in March, June, September and
December.
• Data in this report has been sourced from the survey conducted in March 2019.
• In total, 2,101 mortgage holders (borrowers) took part of which 1520 people who took out their most recent mortgage
on their home (Homeowners) and 581 people who took out their most recent mortgage on an investment property
(Investment property owners). Respondents are nationally representative of the mortgage market by:
• Age
• Gender
• State/ Territory
• Where appropriate, significance testing at the 95% level has been conducted, comparing results over time or between
segments. Significant differences have been marked throughout the report with red and green arrows where ↓ =
Significantly lower and ↑ = Significantly higher
• Further data cuts are available on request
Survey methodology
8
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A U S T R A L I A N M O R T G A G E C O U N C I L
Types of borrowers – definitions
9
First Home Buyer (FHB)
A respondent who has a mortgage
on their home and it is the first
owner-occupier mortgage they
have taken out, regardless of loan
tenure
Investor:
A respondent whose most
recent mortgage is on an
investment property (not the
home they live in)
Refinancer:
A respondent who has
refinanced their mortgage
on their home and is not a
FHB
Subsequent:
A respondent whose most recent
mortgage is an owner occupier
loan, is not a first home buyer and
has not refinanced
Segments are mutually exclusive and make up the total market
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Market context
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A U S T R A L I A N M O R T G A G E C O U N C I L
Key market developments
11
Key developments in the last quarter that affect the mortgage market
July 2018
Big 4 banks required to
submit positive data for
Comprehensive Credit
Reporting (CCR)
August 2018
Westpac, ANZ, and CBA
announce out of cycle rate
increases. NAB commit to
keeping rates unchanged
October 2018
On a national basis,
property prices fall 4.8 per
cent. National dwelling
values have slumped 5.2
per cent since their peak in
October 2017.
September 2018
UBank increase
mortgage rates on
fixed-interest products
February 2019
The final report from the
Royal Commission is
released, 76
recommendations made all
of which are supported by
the Federal government
January 2019
NAB announces out of
cycle rate increase
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A U S T R A L I A N M O R T G A G E C O U N C I L
First home buyers
13
The average loan size for FHB’s has increased by 2.8% in the 12 months to Nov-18, whereas the average loan size for Non FHB’s has decreased by 1.7% over the same period
$336,500
$395,500
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
Ma
r-2
01
3
Jul-
20
13
No
v-2
01
3
Ma
r-2
01
4
Jul-
20
14
No
v-2
01
4
Ma
r-2
01
5
Jul-
20
15
No
v-2
01
5
Ma
r-2
01
6
Jul-
20
16
No
v-2
01
6
Ma
r-2
01
7
Jul-
20
17
No
v-2
01
7
Ma
r-2
01
8
Jul-
20
18
No
v-2
01
8
Average loan sizes
FHB Non-FHB
Monthly and yearly change
Nov-17 Oct-18 Nov-18 Monthly change Yearly change
Proportion of FHB loans 18.0% 18.1% 18.3% 0.2ppt 0.3ppt
FHB average loan size 327,200 338,900 336,500 -0.7% 2.8%
Non-FHB average loan size 402,300 396,800 395,500 -0.3% -1.7%
Source: ABS
18.3
0.0
5.0
10.0
15.0
20.0
25.0
Ma
r-2
01
1Ju
l-2
01
1N
ov-
20
11
Ma
r-2
01
2Ju
l-2
01
2N
ov-
20
12
Ma
r-2
01
3Ju
l-2
01
3N
ov-
20
13
Ma
r-2
01
4Ju
l-2
01
4N
ov-
20
14
Ma
r-2
01
5Ju
l-2
01
5N
ov-
20
15
Ma
r-2
01
6Ju
l-2
01
6N
ov-
20
16
Ma
r-2
01
7Ju
l-2
01
7N
ov-
20
17
Ma
r-2
01
8Ju
l-2
01
8N
ov-
20
18
First home buyer loans as % of all loans
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A U S T R A L I A N M O R T G A G E C O U N C I L
Fixed rate loans
14
The proportion of fixed rate loans in the market decreased by 0.4% to 16.3% in from Oct-17 to Oct-18
Source: ABS and RBANote: Monthly data used from ABS and RBA
16.3%
4.11%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Ma
r-2
01
3
Jun
-20
13
Se
p-2
01
3
De
c-2
01
3
Ma
r-2
01
4
Jun
-20
14
Se
p-2
01
4
De
c-2
01
4
Ma
r-2
01
5
Jun
-20
15
Se
p-2
01
5
De
c-2
01
5
Ma
r-2
01
6
Jun
-20
16
Se
p-2
01
6
De
c-2
01
6
Ma
r-2
01
7
Jun
-20
17
Se
p-2
01
7
De
c-2
01
7
Ma
r-2
01
8
Jun
-20
18
Se
p-2
01
8
3-year fixed lending rate & proportion of fixed rate loans
Proportion of fixed rate loans (LHS)
3-year fixed lending rate Owner Occupier only (RHS)
Monthly and yearly change
Oct-17 Sep-18 Oct-18Monthly change
Yearly change
3-year fixed lending rate
4.12% 4.11% 4.11% 0.00ppt -0.10ppt
Proportion of fixed rate loans
16.70% 14.60% 16.30% 1.70ppt -0.40ppt
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A U S T R A L I A N M O R T G A G E C O U N C I L
Intention to fix
15
Furthermore, almost 1 in 3 borrowers indicate they are likely to fix their rates in the next 12 months
Base: Borrowers (Mar-10: n=1,870, Jun-10: n=1,786, Dec-10, n=1,814, Mar-11: n=1,806, Jun-11: n=1,845, Dec-11: n=1,782, Mar-12, n=1, 729, Jun-12: n=1,866, Sep-12: n=1,847, Dec-12: n=1,741, Mar-13: n=1,757, Jun-13: n=1,793, Sep-13: n=1,705, Dec-13: n=1,830, Mar-14: n=1,700, Jun-14: n=1,785, Sep-14: n=1,715, Dec-14: n=1,692, Mar-15: n=1,735, Jun-15: n=1,792, Sep-15: n=1,738, Jun-16: n=1,741, Sep-16: n=1,728, Dec-16: n=1694, Mar-17: n=1,713, Jun-17: n=1,706, Sep-17: n=1,685, Dec-17: n=1,711, Mar-18: n=1,752, Jun-18: n=1,719, Sep-18: n=1,727, Dec-18: n=1,693, Mar-19: n=1,731). Note: Respondents who selected ’Don’t know’ were removed from analysis. Note^: This data has been averaged on a quarterly basis
31%
13%
0%
1%
2%
3%
4%
5%
6%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Ma
r-1
0
Jun
-10
De
c-1
0
Ma
r-1
1
Jun
-11
De
c-1
1
Ma
r-1
2
Jun
-12
Se
p-1
2
De
c-1
2
Ma
r-1
3
Jun
-13
Se
p-1
3
De
c-1
3
Ma
r-1
4
Jun
-14
Se
p-1
4
De
c-1
4
Ma
r-1
5
Jun
-15
Se
p-1
5
De
c-1
5*
Ma
r-1
6*
Jun
-16
Se
p-1
6
De
c-1
6
Ma
r-1
7
Jun
-17
Se
p-1
7
De
c-1
7
Ma
r-1
8
Jun
-18
Se
p-1
8
De
c-1
8
Ma
r-1
9
Off
icia
l R
BA
ca
sh r
ate
And how likely are you to fix your interest rate in the next 12 months?
Likely Proportion of fixed rate loans ^ (ABS) Official RBA cash rate
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A U S T R A L I A N M O R T G A G E C O U N C I L
3rd Party origination
16
Mortgage brokers account for just over 1 in 2 new residential loan approvals
Source: APRA
Note: Data looks at credit unions and banks with greater than $1bn of term loans
Dec-18,
52%
Dec-18,
38%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jun
-08
Se
p-0
8
De
c-0
8
Ma
r-0
9
Jun
-09
Se
p-0
9
De
c-0
9
Ma
r-1
0
Jun
-10
Se
p-1
0
De
c-1
0
Ma
r-1
1
Jun
-11
Se
p-1
1
De
c-1
1
Ma
r-1
2
Jun
-12
Se
p-1
2
De
c-1
2
Ma
r-1
3
Jun
-13
Se
p-1
3
De
c-1
3
Ma
r-1
4
Jun
-14
Se
p-1
4
De
c-1
4
Ma
r-1
5
Jun
-15
Se
p-1
5
De
c-1
5
Ma
r-1
6
Jun
-16
Se
p-1
6
De
c-1
6
Ma
r-1
7
Jun
-17
Se
p-1
7
De
c-1
7
Ma
r-1
8
Jun
-18
Se
p-1
8
De
c-1
8
Proportion of total new residential loans that are third-party (broker) originated
Bank Credit Unions & Building Societies
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A U S T R A L I A N M O R T G A G E C O U N C I L
Consumer sentiment
17
The Westpac-Melbourne Institute Consumer Sentiment Index recovered in February after a drop in early 2019
Source: Westpac-Melbourne Institute
70.0
80.0
90.0
100.0
110.0
120.0
130.0
Feb-2010 Feb-2011 Feb-2012 Feb-2013 Feb-2014 Feb-2015 Feb-2016 Feb-2017 Feb-2018 Feb-2019
Westpac - Melbourne Institute Consumer Sentiment Index
Julia Gillard
becomes PM
Gillard wins election,
hung parliament
QLD floods,
Cyclone Yasi
Carbon tax
introduced
Abbott
becomes PM
Rudd wins
leadership
spill
Sharp fall in
petrol prices
Federal
budgetTurnbull
becomes PM
OPEC reaches
deal to cut oil
production
Trump elected
as President
Morrison becomes PM
Royal
Commission
Royal
Commission full
report released
Resignation of NAB CEO
and Chairman
Bank levy
announced in
2017 Federal
Budget
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A U S T R A L I A N M O R T G A G E C O U N C I L
Mortgage stress
18
Expectations of mortgage stress is highest amongst borrowers in Western Australia, Queensland and Victoria
Base 1: Borrowers (Jun-16: n= 1952,Sep-16: n=2,021, Dec-16: n=1,880, Mar-17: n=1,886, Jun-17: n=1,928, Sep-17: n=1,920, Dec-17: n=1,945, Mar-18: n=1,942, Jun-18: n=1,964, Sep-18: n=1,954, Dec-18: n=1,904, Mar-19: n=2,101). Base 2: Borrowers (Mar-19: WA: n=233, QLD: n=438, VIC: n=513, NSW: n=524, SA: n=184, ACT: n=54, TAS: n=55, Total: n=2,101); Note: NT was not shown due to insufficient sample Note: Respondents who selected ’I don’t know’ were removed from analysis. Note: Tests for significance were carried out for this question; no significant differences were found
15%
0%
10%
20%
30%
40%
50%
Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19
Mortgage stress (% who expect to struggle with repayments in N12M)
19%16% 16% 15% 13%
7% 7%
15%
0%
10%
20%
30%
40%
50%
WA QLD VIC NSW SA ACT TAS Total
By state/ territory
Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19
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Key focus area – Royal commission’s impact on mortgage lending
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Who is aware of the Royal Commission, how has it impacted trust and consideration?
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A U S T R A L I A N M O R T G A G E C O U N C I L
Awareness of the Royal Commission
21
19% 25% 28% 36%
59% 60%39%
44%
56% 56%54%
36% 35%
49%
37%19% 16% 10% 5% 5% 12%
0%
50%
100%
18-24 25-34 35-44 45-54 55-64 > 64 Total
No - I was not aware of itYes - I am vaguely aware of it but am not following it closelyYes - I am aware of it and have closely followed the findings of the commission
Before today, were you aware of the Royal Commission into banking?
By Age
Base 1: Borrowers (Mar-19: 18-24: n=57, 25-34: n=326, 35-44: n=535, 45-54: n=548, 55-64: n=424, > 64: n=211, Total: n=2,101)Base 2: Borrowers (Mar-19: ACT: n=56, TAS: n=55, NSW: n=547, QLD: n=457, VIC: n=537, SA: n=190, WA: n=248, Total: n=2,101)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total
54%44% 40% 39% 38% 38% 33% 39%
38%45% 48% 51% 48% 47% 54% 49%
9% 11% 12% 11% 14% 15% 12% 12%
0%
50%
100%
ACT TAS NSW QLD VIC SA WA Total
By State
Older borrowers were more likely to have been aware of the royal commission and closely followed the findings, compared to younger borrowers. Also borrowers in ACT, TAS and NSW were most likely to have been aware and closely followed the royal commission
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A U S T R A L I A N M O R T G A G E C O U N C I L
Does awareness vary by borrower segments?
22
Base: Borrowers (Mar-19: Investor: n=581, Refinancer: n=268, Subsequent: n=652, FHB: n=600, Total: n=2,101)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total
Investors and Refinancers were significantly more likely to have been aware and closely followed the findings from the royal commission, whereas FHB were significantly more likely to have not been aware of the royal commission at all
45% 44% 41%
28%
39%
45% 46%48%
55%
49%
10% 10% 11%17%
12%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Investor Refinancer Subsequent FHB Total
Borrowers not aware of the commission at all Borrowers vaguely aware of the commission
Borrowers aware of and closely following the commission
Before today, were you aware of the Royal Commission into banking?
By Borrower segments
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A U S T R A L I A N M O R T G A G E C O U N C I L
To what extent do borrowers trust their lender?
23
Base: Borrowers (Mar-18: n=2,031, Jun-18: n=2,058, Sep-18: n=2066, Dec-18: n=2004, Mar-19: Bendigo Bank: n=43, Suncorp: n=72, ME: n=43, ING: n=82, St. George: n=77, Westpac: n=246, ANZ: n=294, CBA: n=458, Bankwest: n=69, NAB: n=244, Total: n=2,101)Note: Tests for significance were carried out for this question; ↑ Significantly higher than Dec-18↓; Significantly lower than Dec-18
Overall, non-Big 4 lenders are more highly trusted
72%
67%
60% 59%
53%48%
44% 44% 43% 43%
49%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Bendigo Bank Suncorp ME ING St. George Westpac ANZ CBA Bankwest NAB Total
Please indicate the extent to which you trust your most recent lender overall
Highly trust (8-10 out of 10) – By Top 10 most recent lenders
Trended
Mar-18 Jun-18 Sep-18 Dec-18 Mar-19
ME increased
rates on
home loans
in Jun-18
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A U S T R A L I A N M O R T G A G E C O U N C I L
Trust – Direct vs. Broker
24
Among broker originated borrowers, trust has declined for lenders however trust has increased for brokers
Please indicate the extent to which you trust your most recent lender and broker
Highly Trust (8-10/10) - Direct vs. Broker - Trended
Base: Borrowers (Sep-18: n=2066, Dec-18: n=2004, Mar-19: n= Direct borrowers: n= 1352, Broker orginated borrowers: n=525, Total: n=2101) Note: Tests for significance were carried out for this question; ↑ Significantly higher than Dec-18↓; Significantly lower than Dec-18
Trust levels with brokerTrust levels with lender
58%
52%
62%57%
47%
59%
54%
42%
65%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Direct Borrowers Broker-originated borrowers Broker-originated borrowers
Sep-18 Dec-18 Mar-19
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A U S T R A L I A N M O R T G A G E C O U N C I L
What impact does awareness have on consideration?
25
Base: Borrowers (Mar-19: Borrowers aware of and closely following the commission: n=811, Borrowers vaguely aware of the commission: n=1,029, Borrowerswho are not aware of the commission : n=261, Total: n=2,101)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total
Those who are aware of the royal commission and closely followed the findings were significantly less likely to be willing to consider all types of lenders, whereas those who were not aware were significantly more likely to be willing to consider all lenders
38% 37%32%
24%19%
16%
37%33%
24% 26%
20% 18%13%
44%
19%14%
18% 18%15% 14%
59%
33%28% 28%
22%18%
14%
43%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Big 4 Other Banks Regionals Non Banks Mutuals Online Banks I would be willing to
consider all lenders
Borrowers aware of and closely following the commission Borrowers vaguely aware of the commission
Borrowers not aware of the commission at all Total
Are there any lenders you would be unwilling to consider to obtain a mortgage for the home you live in?
By Awareness of the Royal Commission
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A U S T R A L I A N M O R T G A G E C O U N C I L
Will it effect refinancing/ switching intentions?
26
Almost 1 in 4 borrowers who are aware of the royal commission and closely followed the findings are likely to refinance their most recent loan, however more than half of those intend on doing so internally
Base: Borrowers (Mar-19: Borrowers aware of and closely following the commission: n=811, Borrowers vaguely aware of the commission: n=1,029, Borrowers not aware of the commission at all: n=261, Total: n=2,101)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total
12%
7%4%
8%
3%
3%3%
3%
7%
8% 10%
8%
22%
17% 17%19%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Borrowers aware of and closely
following the commission
Borrowers vaguely aware of the
commission
Borrowers not aware of the commission
at all
Total
How likely would you be to refinance your mortgage in the next 12 months?
When you refinance your mortgage, will you?
By Awareness of the Royal Commission
Remain with your existing provider Switch your home loan provider I am not sure Highly likely to refinance
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A U S T R A L I A N M O R T G A G E C O U N C I L
3%10%
18%
29%
44%49%
56%
73%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0.19% or less 0.20 - 0.29% 0.30 - 0.39% 0.40 - 0.49% 0.50 - 0.59% 0.60 - 0.79% 0.80 - 0.99% 1.00% or more
Pro
po
rtio
n o
f b
orr
ow
ers
wh
o c
an
be
en
cou
rag
ed
(Cu
mu
lati
ve
)
Rate difference required
Borrowers aware of and closely following the commission Borrowers vaguely aware of the commission
Borrowers not aware of the commission at all Total
Aware and
followed
findings
closely
Vaguely
awareNot aware Total
% who would
not switch
lenders for
lower rate
26% 25% 35% ↑ 27%
How willing would they be to switch for lower rate?
27
3 in 4 borrowers who are aware the royal commission and followed the findings closely would switch for lower rates, whereas those who are not aware of the royal commission are significantly more likely to not switch purely based on interest rates
Base: Borrowers (Mar-19: Borrowers aware of and closely following the commission: n=811, Borrowers vaguely aware of the commission: n=1,029, Borrowers who are not aware of the commission : n=261, Total: n=2,101)Note: Respondents who said ‘I am not sure’ have been removed from analysis Note: Tests for significance were carried out for this question; ; ↑ Significantly higher than Total↓ Significantly lower than Total
If you saw a lower mortgage rate at another institution, at what point would you consider switching your
mortgage?
By Awareness of the Royal Commission
Cumulative proportion of borrowers who can be incentivised by this rate discount
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What would be the impact of implementing an upfront fee to use brokers?
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A U S T R A L I A N M O R T G A G E C O U N C I L
What % of borrowers would prefer to use a broker?
29
44% 42% 37% 29% 27% 37%
56% 58% 63% 71% 73% 63%
0%
50%
100%
18-34 35-44 45-54 55-64 > 64 Total
If you were to apply for your mortgage today, which channel would you most prefer to apply through?
By Age
Apply through broker Apply directly to a lender
Younger borrowers and those who hold their most recent loan with Bankwest and ING are significantly more likely to prefer applying through a broker
Base 1: Borrowers (Mar-19: 18-34: n=383, 35-44: n=535, 45-54: n=548, 55-64: n=424, > 64: n=211, Total: n=2,101)Base 2: Borrowers (Mar-19: Bankwest: n=69, ING: n=82, Suncorp: n=72, St. George Bank: n=77, CBA: n=458, NAB : n=244, ME : n=43, Westpac : n=246, ANZ : n=294, Bendigo Bank : n=43, Total: n=2,101) Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total
62% 54% 43% 38% 37% 36% 35% 35% 34%14%
37%
38% 46% 57% 62% 63% 64% 65% 65% 66%86%
63%
0%
50%
100%
Bankwest ING Suncorp St. George
Bank
CBA NAB ME Westpac ANZ Bendigo Bank Total
If you were to apply for your mortgage today, which channel would you most prefer to apply through?
By Top 10 most recent lenders
Apply through broker Apply directly to a lender
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Why do borrowers use brokers?
30
34% 33% 31% 30% 29% 28%26% 25%
20% 19% 18%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Brokers have
access to
better rates
from lenders
It was more
convenient
They could
make me
aware of
lenders I
might
otherwise be
unaware of
They could
guide me
through the
application
process
They could
provide me
with the best
advice with
regards to my
home lending
needs
To be able to
find the right
product with
features
relevant to my
needs
I had a
previous good
experience
with a broker
A broker was
recommended
by family &
friends
I felt it would
be easier to
get my loan
approved if I
used a broker
The process is
faster with a
broker
Brokers offer
better
customer
service
Why did you apply for your most recent loan through a broker instead of directly with the lender?
Ranked Top 3 - Broker applicants
By Borrower segments
FHB Investor Refinancer Subsequent Total
Base: Broker applicants (Mar-19: FHB: n=129, Investor: n=160, Refinancer: n=65, Subsequent: n=171, Total: n=525)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total
First home buyers were significantly more likely than other segments to have used a broker because they could guide them through the application process and because a broker was recommended to them by family & friends
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How much would they be willing to pay brokers?
31
$689
$264 $233 $217
$319
18-34 35-44 45-54 55+ Total
By Age
Imagine all brokers charged an upfront fee to provide you with advice on a mortgage and process your
application. In this scenario, what is the maximum you would be willing to pay to use a broker?
$502
$289 $249
$207
$319
FHB Investor Refinancer Subsequent Total
By Borrower segments
Older borrowers, and subsequent borrowers would be willing to pay brokers significantly less than all other borrowers
Base: Borrowers (Mar-19:18-34: n=383, 35-44: n=535, 45-54: n=548, 55+: n=635, FHB: n=600, Investor: n=581, Refinancer: n=268, Subsequent: n=652, Online: n=236, Mobile lender: n=208, Broker: n=525, Branch: n=777, Phone: n=131, NSW: n=547, QLD: n=457,VIC: n=537, ACT: n=56, WA: n=248, TAS: n=55, SA: n=190, Total: n=2,101)Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total
27% of borrowers indicated that
they would not be willing pay an application fee to brokers
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32
$484 $467
$362
$254 $208
$319
Online Mobile
lender
Broker Branch Phone Total
By Application Channel for most recent loan
67% borrowed less than
$500,000
Base: Borrowers (Mar-19:Online: n=236, Mobile lender: n=208, Broker: n=525, Branch: n=777, Phone: n=131, Apply through broker : n=776, Apply directly to a lender : n=1,325, Total : n=2,101, Total: n=2,101)Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total
Does this vary by previous and preferred application channel?Borrowers who applied through a phone for their most recent loan and those who would prefer to apply directly to a lender if they had to apply for a mortgage today would pay brokers less than other borrowers
$361
$295 $319
Apply through broker Apply directly to a lender Total
By Preferred application channel if they had
to apply for a mortgage today
Imagine all brokers charged an upfront fee to provide you with advice on a mortgage and process your
application. In this scenario, what is the maximum you would be willing to pay to use a broker?
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How will borrowers respond to upfront fees?
33
20%24%
45%
68%
12%15%
28%
35%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Brokers charge a $2,000 fee, payable
upfront. The lender does not charge a
fee
Brokers and lenders both charge a
$2,000 fee payable upfront. Lenders
offer $2,000 cashback for taking out
the loan with them
Brokers and lenders both charge a
$2,000 fee. Brokers charge the fee
upfront and lenders add the fee onto
your loan amount
Brokers and lenders both charge a
$2,000 fee, payable upfront
How would you be most likely to apply for a mortgage if either your lender or broker charged an upfront
application fee?
% who would apply through broker
Broker applicants All borrowers
More than 2 in 3 borrowers who applied through a broker previously would still apply their a broker if both brokers and lenders charge a upfront fee
Base : Borrowers (Mar-19: Broker applicants: 525, Total; n= 2011)
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Do preferences vary by age and borrower segments?
34
Base 1: Borrowers (Mar-19: 18-24: n=57, 25-34: n=326, 35-44: n=535, 45-54: n=548, 55-64: n=424, > 64: n=211, Total: n=2,101)Base 2: Borrowers (Mar-19: Investor: n=581, Refinancer: n=268, Subsequent: n=652, FHB: n=600, Total: n=2,101)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total
45%
24%
0%
10%
20%
30%
40%
50%
18-34 35-44 45-54 55-64 > 64
By Age
Would approach a Broker
39%35%
Investor Refinancer Subsequent FHB Total
By Borrower segments
Would approach a Broker
How would you be most likely to apply for a mortgage if brokers and lenders both
charge a $2,000 fee, payable upfront?
Younger borrowers and Investors would be significantly more likely to apply through a broker if brokers and lenders both charge a $2,000 fee payable upfront, whereas FHB would be significantly more likely to apply via a broker even if only they charged a fee
How would you be most likely to apply for a mortgage if brokers charge a $2,000
fee, payable upfront and the lender does not charge a fee?
22%
7%
0%
10%
20%
30%
40%
50%
18-34 35-44 45-54 55-64 > 64
15%12%
FHB Investor Refinancer Subsequent Total
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Preference for paying a mandatory application fee
35
43%
26%
32%
41%
19%
40%38%
18%
44%
35%
23%
42%
31%
23%
45%
38%
21%
41%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Added onto your loan, where your loan value would
increase by $2,000
All at once, where you pay $2,000 upfront I am not sure
Imagine all loans have an application fee charged by either your lender or broker depending on who you
applied through. How would you prefer to pay this fee?
By Age
18-34 35-44 45-54 55-64 > 64 Total
Base: Borrowers (Mar-19: 18-24: n=57, 25-34: n=326, 35-44: n=535, 45-54: n=548, 55-64: n=424, > 64: n=211, Total: n=2,101)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total
Younger borrowers are more likely to prefer for the application fee to be added onto their loan compared to older borrowers
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What would those who won’t approach a broker do?
36
69%63%
34%
77%69%
14% 22%
20%
13%
15%
16% 15%
46%
10%16%
0%
20%
40%
60%
80%
100%
Borrowers aware of
the Royal Commission
Borrowers not aware
of the Royal Commission
Borrowers who do not trust
their lender (0-2)
Borrowers who trust their
lender completely (8-10)
Total
Would approach MFI
Would approach a FI they have a relationship with
Would approach a FI they don’t have a relationship with
Almost 4 in 5 borrowers who would not approach a broker if they charged them a $2,000 application fee and highly trust their most recent lender would approach their MFI
Base: Borrowers who would not approach a broker (Mar-19: "Borrowers aware of the Royal Commission: n=1,630, Borrowers not aware of the Royal Commission: n=213, Borrowers who do not trust their lender (0-2): n=95, Neutral (3-7): n=836, Borrowers who trust their lender completely (8-10): n=912, Total: n=1,843")Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total
54% of borrowers who highly trust their lender hold their most recent loan with a Big 4 bank
You have indicated that you would not approach a broker if they charged you a $2,000 fee to process your application. If you were
applying for your mortgage in this scenario, how would you most likely go about finding a lender?
Borrowers who would not approach a broker
By Whether they are aware of the Royal Commission and extent to which they trust their most recent lender
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• Acquisition
• Engagement, Satisfaction, Advocacy & Retention
• Switching & Refinance Intention
Market report
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Acquisition
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39
Base: Borrowers (Dec-16: n=2,000, Mar-17: n=2,005, Jun-17: n=2,020, Sep-17: n=2,067, Dec-17: n=2,051, Mar-18: n=2,031, Jun-18: n=2,058, Sep-18: n=2,066, Dec-18: n=2,004, Mar-19: n=2,101) Note: Tests for significance were carried out for this question, ↑ Significantly higher than Dec-18, ↓ Significantly lower than Dec-18
17%
10%9%
8% 7%5% 4% 4% 3% 3% 3% 2% 2% 2% 2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
CBA ANZ NAB ING Westpac Aussie
Home
Loans
ME Bendigo
Bank
Credit
Unions
Bankwest St. George
Bank
Suncorp
Bank
Mutual
Banks
UBank RAMS
If you did not have a mortgage and you needed to obtain a mortgage for the home you live in, which is the first
institution that you would approach?
Top 15 lenders
Trended
Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Mar-19
Top of mind considerationCBA was the only lender that experienced a significant increase in top of mind consideration over the Mar-19 quarter, also ING’s consideration has been trending onwards since Dec-16 and it has now overtaken Westpac to be amongst the top 4 lenders for top of mind consideration
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How has consideration changed?
43%
16%
13%
9% 8%
3%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Big 4 Regionals Online banks Mutuals Non-banks Other banks
If you did not have a mortgage and you needed to obtain a mortgage for the home you live in, which is the
first institution that you would approach?
Trended
Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19
Base: Borrowers (Mar-17: n=2,005, Jun-17: n=2,020, Sep-17: n=2,067, Dec-17: n=2,051, Mar-18: n=2,031, Jun-18: n=2,058, Sep-18: n=2,066, Dec-18: n=2,004, Mar-19: n=2,101) Note: Tests for significance were carried out for this question: ▲ Significantly higher than Dec-18 ▼ Significantly lower than Dec-18
Future consideration for non-big four players has increased over the last two years with almost 3 in 5 borrowers now saying they would approach a Non-Big 4 bank first
47% 43%
52% 57%
Mar-17 Sep-17 Mar-18 Sep-18 Mar-19
Big 4 vs. Non-Big 4
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Drivers of lender choice
41
Broker recommendation and price (most competitive interest rates) have been the most important drivers of lender choice for borrowers who took out their loan in the last two years
Base: Borrowers who took out their most recent loan within the last two years. (Mar-19: n=434)
17%
16%
13%
8%
4%
4%
3%
5%
4%
2%
6%
4%
2%
6%
6%
4%
3%
3%
2%
3%
2%
1%
2%
2%
3%
5%
4%
2%
2%
2%
25%
21%
17%
16%
13%
13%
10%
10%
8%
7%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
They were recommended by my broker
They were offering the most competitive interest rates
They were my Main Financial Institution for personal banking
They had the lowest fees
They offered an offset account
I trust this institution
They offered mortgages with product features that were most relevant to me
I already had a mortgage with them
Family/friends recommended them
I could negotiate with them
Why did you choose your most recent lender?
Top 10 reasons – Loans taken out within the last two years
Rank 1 Rank 2 Rank 3 Top 3
Ranked as the most important driver of choice in Dec-18
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Product-related drivers of lender choice
42
The most important product-related drivers of home loan choice are the ability to make overpayments, 100% offset account and no application fee
Base: Borrowers who took out their most recent loan within the last two years. (Mar-19: n=434)
17%
14%
10%
5%
8%
6%
4%
4%
5%
5%
14%
14%
8%
8%
5%
7%
5%
4%
5%
4%
12%
11%
10%
10%
4%
5%
6%
4%
2%
3%
43%
39%
28%
23%
18%
18%
15%
12%
12%
12%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Ability to make overpayments
100% offset account
No application fee
Access to a redraw facility
Recommendation by broker
Ability to fix all or part of the loan
Straightforward application process
An existing relationship with the financial institution
Maximum available loan amount
Interest only option
Aside from interest rates, what do you see as the top most important factors in choosing the right home loan?
Rank – Top 10
Loans taken out within the last two years
Rank 1 Rank 2 Rank 3 Top 3
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Research channels
43
Almost 2 in 5 borrowers who took out their most recent within the last year spoke to a broker when researching, while the proportion of borrowers using online research methods such as Canstar Cannex star ratings has increased over time
Base: Borrowers (Mar-19: More than 10 years ago: n=526, Between 5 and 10 years ago: n=491, Between 3 and 5 years ago: n=372, Between 2 and 3 years ago: n=230, Between 1 and 2 years ago: n=222, Within the last year: n=212, Total: n=2,101)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than TotalNote: Borrowers who selected ‘I am not sure’ for the loan tenure question were removed from analysis
28%
20%18%
16% 16%
10%9%
8% 8%7%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Spoke to a
broker
FI websites Friends &
family
FI branches Google Comparison
website
Financial
planner
Broker website Realestate
.com.au
Canstar Cannex
star ratings
Which sources of information did you use when researching your most recent loan?
Top 10 Sources
By Loan tenure
More than 10 years ago Between 5 and 10 years ago Between 3 and 5 years ago Between 2 and 3 years ago
Between 1 and 2 years ago Within the last year Total
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34%
24%22%
19%
15%14%
10% 9% 9% 9%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Spoke to a
broker
FI websites Google Friends & family Comparison
website
FI branches Broker website Realestate
.com.au
Canstar Cannex
star ratings
Financial
planner
Which sources of information did you use when researching your most recent loan?
Top 10 sources – Within last two years
By borrower segments
FHB Investor Refinancer Subsequent Total
Research channels
44
Borrowers are most likely to conduct research by speaking to a broker ; Subsequent borrowers tend to utilise fewer sources of information on average when conducting research compared to other borrower segments, but they were significantly more likely to have spoken to a broker
Base: Borrowers who took out their most recent loan within the last two years (Mar-19: FHB: n=125, Investor: n=131, Refinancer: n=57, Subsequent: n=121, Total: n=434)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total
Average number of sources used for research
FHB Investor Refinancer Subsequent Total
2.3 ↑ 2.0 1.8 1.9↓ 2.0
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Channels for enquiries
45
Broker has overtaken branch as the most used enquiry channels for mortgages, also the use of brokers has been trending onwards over time to the point where more than 2 in 5 borrowers who took out their loan in the last year used them to have enquires
18%
42%44%
27%
18%
22%
15%
12%10%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
More than 10 years ago Between 5 and 10 years
ago
Between 3 and 5 years
ago
Between 2 and 3 years
ago
Between 1 and 2 years
ago
Within the last year
What channels did you use to make enquiries when you were looking for your mortgage?
By loan tenure
Broker Branch Online Phone Mobile lender
Base: Borrowers (Mar-19: More than 10 years ago: n=526, Between 5 and 10 years ago: n=491, Between 3 and 5 years ago: n=372, Between 2 and 3 years ago: n=230, Between 1 and 2 years ago: n=222, Within the last year: n=212, Total: n=2,101)Note: Borrowers who selected ‘I am not sure’ for the loan tenure question were removed from analysis
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Satisfaction – loan application process
46
Borrowers who applied via a mobile lender are most likely to be highly satisfied with their application experience, however over Mar-19 quarter the proportion of borrowers who applied through this channel or via a branch and were highly satisfied has decreased significantly
Base: Borrowers who took out their loan within the last 2 years (Sep-18: n=502, Dec-18: n=449 , Branch: n=122, Mobile lender: n=32, Online: n=72, Broker: n=151, Total: n=434) Note:Tests for significance were carried out for this question, ↑ Significantly higher than Dec-18, ↓ Significantly lower than Dec-18Note: Respondents who selected ‘I’m not sure’ for the application channel and loan tenure question have been removed from analysisNote: *Small sample size (n<30); indicative only
63% 62% 61%56% 54%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Mobile Lender Phone* Branch Online Broker
How satisfied were you with the overall loan application process?
Loans taken out within the last 2 years - % Highly Satisfied (8-10)
By final application channel - Trended
Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19
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Satisfaction – loan application process
47
Key
1Understanding of the mortgage application process
2Communication/updates on the status of your application
3 Ease of providing documentation
4 Speed of the application process
5 Ease of obtaining a pre-approval
6 Ease of obtaining a full approval
7Confidence in the mortgage product (i.e it was the right loan for you)
8 Security/privacy of your information
9 Customer Service
12
3
4
5 6
7
8
9
6.50
7.00
7.50
8.00
0.65 0.85
Sa
tisf
act
ion
(m
ea
n s
core
ou
t o
f 1
0)
Correlation with overall satisfaction
Satisfaction vs Correlation
Loan application process –Borrowers who took out their loan in the last 2 years
Base: Borrowers who took out their loan within the last 2 years (Mar-19: n=434)Note: █ = ‘Pain points’ for the particular segment in question
Key pain point for borrowers include communication on application status, speed of the application process and the ease of obtaining a pre-approval
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39% 41%36% 36%
25%
0%
10%
20%
30%
40%
50%
18-34 35-44 45-54 55-64 65-80
How likely would you be to complete and submit a mortgage application entirely via an online channel?
Highly likely (8-10 out of 10)
Online mortgage appetite
48
More than 2 in 5 borrowers aged between 35 and 44 would be highly likely submit a mortgage application entirely online, whereas only 1 in 4 borrowers aged 65 or above would be highly likely to do the same
Base 1: Borrowers (Mar-16: n=1,924, Sep-16: n=2,108, Dec-16: n=2,000, Mar-17: n=2,005, Jun-17: n=2,020, Sep-17: n=2,067, Dec-17: n=2,051, Mar-18: n=2,031, Jun-18: n=2,058, Sep-18: n=2,066, Dec-18: 2,004, Mar-19: 2,101) Note^: Data has been aggregated over 4 wavesBase 2: Borrowers (Mar-19: n= 18-34: n=383, 35-44: n=535, 45-54: n=548, 55-64: n=424, 65-80: n=211, Total: n=2,101)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total
28%32% 34% 35% 34% 35% 34% 35% 33% 33% 33% 34%
0%
10%
20%
30%
40%
50%
Mar-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19
How likely would you be to complete and submit a mortgage application entirely via an online channel?^
Highly likely (8-10 out of 10) – Trended
12 month rolling average^
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Switching & Refinance Intention
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Refinancing/ switching intention
50
Refinancing intention has significantly decreased since Dec-18, a result of the out-of-cycle rate increases imposed by many lenders and the decrease in trust from the Royal Commission findings.
21%
19%
1.5%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
0%
5%
10%
15%
20%
25%
30%
Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19
How likely would you be to refinance your mortgage in the next 12 months?
Highly likely (8-10 out of 10). By homeowners vs investors
Homeowners Investors Total Official RBA cash rate (RHS)
Base: Borrowers (Sep-14: n=2,011, Dec-14: n=2,021, Mar-15: n=2,037, Jun-15: n=2,070, Sep-15: n=2,036, Dec-15: n=2,033, Mar-16: n=2,023, Jun-16: n=2,027, Sep-16: n=2,011, Dec-16: n=2,000, Mar-17: n=2,005, Jun-17: n=2,020, Sep-17: n=2,067, Dec-17: n=2,051, Mar-18: n=2,031, Jun-18: n=2,058, Sep-18: n=2.066, Dec-18: n=2,004, Mar-19: =Homeowners: n=1,520, Investors: n=581, Total: n=2,101)Note: Tests for significance were carried out for this question; no significant different were found
Jul/Aug-18: Many of the non-big 4 banks
announce out-of-cycle rate increases.
Sep-18: The Big 4 banks announce out of
cycle rate increases.
2016-17: Mortgage repricing
throughout the market
Feb/Mar-18: Royal Commission findings
being reported in media and ACCC interim report on mortgage pricing
released
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Refinancing/ switching intention
51
ING and Bendigo Bank borrowers are the most likely to refinance in the next 12 months, however 2 in 5 ING borrowers intending on switching internally whereas 3 in 5 Bendigo Bank borrowers intend on doing the same
Base: Borrowers (Mar-19: ING: n=82, Bendigo Bank: n=43, Suncorp : n=72, ANZ: n=294, Bankwest: n=69, CBA: n=458, NAB : n=244, Westpac : n=246, St. George : n=77, ME : n=43, Total: n=2,101) Note: Tests for significance were carried out for this question; ↑ Significantly higher than Total ↓ Significantly lower than Total
14%
20%
11% 10%5%
8% 8% 7% 5% 4%8%
2%
2%2%
2%
3% 3%3%
2%3%
3%
16%13%
11%
8%
12%7% 7% 8%
7% 7%
8%
33% 33%
24%
19% 19% 18% 18% 18%
14% 14%
19%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
ING Bendigo Bank Suncorp ANZ Bankwest CBA NAB Westpac St. George ME Total
How likely would you be to refinance your mortgage in the next 12 months?
When you refinance your mortgage, will you?
By Top 10 Most recent lenders
Remain with your existing provider Switch your home loan provider I am not sure Highly likely to refinance
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19%
12%
0%
5%
10%
15%
20%
25%
30%
Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19
How likely would you be to refinance your mortgage in the next 12 months? Highly likely (8+/10)
Have you refinanced your mortgage in the last 12 months? Yes
Trended
Highly likely (8+/10) to refinance in N12M Have refinanced in L12M
How does intention compare to behaviour?
Base: Borrowers (Dec-14: n=2,021, Mar-15: n=2,037, Jun-15: n=2,070, Sep-15: n=2,036, Dec-15: n=2,033, Mar-16: n=2,023, Jun-16: n=2,027, Sep-16: n=2,011, Dec-16: n=2,000, Mar-17: n=2,005, Jun-17: n=2,020, Sep-17: n=2,067, Dec-17: n=2,051, Mar-18: n=2,031, Jun-18: n=2,058, Sep-18: n=2.066, Dec-18: n=2,004, Mar-19: n=2,101)Note: Tests for significance were carried out for this question: ▲ Significantly higher than Dec-18 ▼ Significantly lower than Dec-18
The gap between intention to refinance and actual refinancing has narrowed over the Mar-19 quarter, with the proportion of borrowers that have refinanced in the last 12 months increasing significantly
5% 4% 4% 3% 4% 7% 6% 7% 9% 8% 9% 7% 7% 10% 12% 14% 13% 7%
Gap between
intention and
actual
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Who is currently winning the switching game?
53Base: Borrowers who have switched lenders within the last year (Mar-19: n=70)
47%
14%
6%
10%
4%
19%
57%
11%
4%
10%
3%
9%
Big 4 Banks
Regionals
Mutuals
Online Banks
Non Banks
Other Banks
Previous lender vs. Current lender
Borrowers who have switched lenders within the last year
Previous lender Current lenderNet change
+10%▲
-3% ▼
-1% ▼
0%
-1%▼
-10%▼
The majority of external switching occurs within the Big 4, however they are still the biggest winners from switching
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Intelligence to bank on
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