CBA home lending slide flags new mortgage war
Commonwealth Bank will be forced to offer more competitive mortgages to halt a two-month slide in market share, the first time in two decades that the country’s largest lender has recorded an overall contraction in its home loan book in consecutive months.
Official data released by the prudential regulator shows CBA’s home loan lending to owner occupiers, the most hotly contested part of the market, had fallen to $363 billion at the end of August. This was down from $364 billion in July, which was down on $366 billion in June.
That made CBA’s loan book 0.6 per cent smaller since the start of the financial year, an annualised rate of 3.6 per cent. The latest Australian Prudential Regulation Authority data shows this is the first time in 20 years that CBA’s mortgage portfolio has shrunk over back-to-back months.
CBA is unlikely to cede market share for another month, which is likely to trigger the next phase in the mortgage wars. Louie Douvis
CBA’s performance is largely driven by price, according to mortgage brokers. The bank has been maintaining average pricing 0.25 percentage higher than Westpac for several months on its standard variable interest rates, according to market sources.
This has allowed Westpac – which has had the lowest offers in the market – to take customers from CBA; Westpac’s share of the home loan market has jumped to 21.4 per cent, its highest level since December.
Goldman Sachs and Macquarie believe CBA will not allow its market share to shrink further.
Victor Gorman, a Macquarie analyst, told clients he saw “limited appetite for CBA to cede market share in the medium term, potentially reigniting some level of mortgage competition in the industry”.
The most likely response for CBA, according to
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