More Australians switching to smaller mortgage lenders

A growing number of Australians are abandoning the major banks and refinancing their mortgages with smaller, regional lenders, a major broker has said.

Australia Finance Group (AFG) reported that refinancing has hit a record high of 37.2 per cent of all its mortgage activity, Money AU reported.

The company’s latest index reveals that the major banks and their subsidiaries had a 82 per cent share of the home loan market in March, down from 91 per cent during the same period last year.

Mark Hewitt, AFG’s general manager, noted that Australian borrowers are increasingly likely to compare home loans now that competition has returned to the market and the economy has recovered.

"We went through a period where there were very few alternatives for borrowers as the second tier, or the banks outside the majors, had funding restrictions … That is freeing up somewhat . . . so we are seeing them come the market with some quite competitive offers on price and product features," he added.

Housing affordability took a further hit this week following the Reserve Bank’s decision to raise the official cash rate to 4.25 per cent, with many of the major banks increasing their home loan rates accordingly.

This article is brought to you by Mozo – Helping you compare home loans ADNFCR-1761-ID-19711078-ADNFCR