Australia’s mortgage market grew at just 4.2 per cent in the year to September 2012, in part due to the reclassification of billions of dollars of residential lending by Commonwealth Bank (CBA) and National Australia Bank (NAB) as business debt.

According to CoreData’s Australian Mortgage Report for the September 2012 quarter published this week, the impact of these errors dragged mortgage-system growth down from between 4 per cent and 7 per cent in 2011.

Even at these levels it remains well below the near 12-per-cent annual system growth experienced five years ago. The gain in the final three months of the period was 0.7 per cent.

The report analyses data from the Australian Prudential Regulation Authority (APRA), the Reserve Bank of Australia (RBA) and the Australian Bureau of Statistics (ABS) to benchmark the performance of bank and non-bank lenders.

Long-term analysis – year-on-year change

Owner-occupied lending currently accounts for $852 billion, or 67.7 per cent of the total outstanding mortgage value in Australia. Residential-investment lending is $406 billion or 32.3 per cent.

While CBA remains the number one residential lender, with the bank holding a $314-billion portfolio, NAB is currently outpacing its big four rivals in the mortgage-book stakes, increasing its book by 7.5 per cent to $187 billion for the year to September 2012.

National Australia Bank’s market share is currently 14.9 per cent, compared to 24.8 per cent for CBA, 23.8 per cent for Westpac and 13.6 per cent for ANZ.

Over the same time period, CBA experienced the lowest growth in its mortgage book among the big four banks with a mere 1.4-per-cent increase.

Westpac reached $300 billion in outstanding mortgages, as the bank racked up a 2.1-per-cent book increase for the year leading up to September, while ANZ delivered a 7.2-per-cent increase to $171 billion.

Outside the big four, ING Direct managed a 1.2-per-cent increase to $37.5 billion for the year to September 2012, including a 0.4-per-cent fall for the last three months of the period. ING Direct has a market share of 3 per cent.

Long-term analysis – net new lending
 

Other findings in the CoreData report include:

• Interest rate is the biggest decision driver when it comes to taking out a mortgage, followed by fees, charges and product flexibility.