Smaller lenders get a look in with Mortgage Choice

Consumer preferences may be shifting in the mortgage market, with demand no longer so strong for loans from the four major banks.

Home loan broker Mortgage Choice reported yesterday that big bank share of its loan settlements has fallen back to pre-financial crisis levels.

The group, which has a $36 billion loan book and had $8.6 billion of settlements in 2008/09, had a peak in "big four" settlements in the December 2008 quarter, at 75 per cent of total business.

The proportion of big bank settlements came back to 71 per cent in the March 2009 quarter and to 60 per cent in the June 2009 quarter.

Mortgage Choice chief executive Michael Russell said yesterday that big bank share fell to 57 per cent in the September 2009 quarter.

Lenders that are getting a bigger share of Mortgage Choice settlements are mostly second tier banks, including St George, BankWest, Suncorp, ING Direct and AMP Banking.

Two of these are owned by major banks, so the degree of the shift in demand away from major banks may be overstated.

Russell said: "Those groups have been aggressive around pricing. Some have bought market share."

Mortgage Choice has put a couple of new lenders on its panel this year. It started doing business with Homeloans Limited earlier in the year, at a time when bank settlements were taking weeks and it needed a group that could handle fast turnaround.

Last week it put Liberty Financial on its panel. Russell said Liberty had "very compelling" motor vehicle and commercial products.

He said Liberty would also be offering what it called near-prime loans.

"With the tightening of lending criteria some banks won't lend to people who have a credit file entry for a late power or telco bill payment. Liberty is calling those borrowers near-prime.

"We have some other groups that are keen to come back but pricing is still an issue."