Westpac hits market share high in mortgages
Westpac has grown its mortgage book ahead of its rivals for the third month running, accelerating competition between retail banks where margins are already under intense pressure.
The Sydney-based lender acquired nearly $3 billion of mortgages in August, new lending data shows, a jump of 0.6 per cent and near double the growth rate of the overall system. This boosted Westpac’s share of the home loan market to 21.4 per cent – biting into the all-dominant Commonwealth Bank.
It is Westpac’s highest share of the market since December 2022; however, Goldman Sachs analyst Andrew Lyons warned of the excess pressure this would put on profit margins.
Goldman Sachs analyst Andrew Lyons says mortgage competition had appeared to ease earlier in the year, but expects CBA to step back into the fray. Rob Homer
“While we’ve seen some relief in mortgage competition, we do not expect this to be sustained over the remainder of 2023 and into 2024, and with
ongoing deposit (pricing and mix) pressures, we now forecast financial year 2024 and 2025 net interest margins down,” Mr Lyons said.
Net interest margins, or NIMs, are a core measure of bank profitability, but have come under pressure due to the costly “mortgage wars” as the major banks responded to a new competitive threat from Macquarie Bank by introducing low-margin and even unprofitable terms.
CBA reported that its margins fell 0.05 percentage points in the half to June to 2.05 per cent as lenders flooded the market with cashback offers to lure refinancing borrowers.
The trend was replicated at Westpac and National Australia Bank when they gave their third quarter updates, and analysts and investors will have a keen eye on NIMs whenthey and ANZ report their full year results next
Read more on afr.com
