Australian Mortgage Council...Consumer sentiment 17 The Westpac-Melbourne Institute Consumer Sentiment Index recovered in February after a drop in early 2019 Source: Westpac-Melbourne

www.rfigroup.com Copyright Retail Finance Intelligence Pty Limited Commercial in Confidence

Australian Mortgage Council

For questions and enquiries, please contact:

• Julien Wilson, [email protected]

• Phone, +612 9126 2623

Analyst: Nitish Bhatt

March 2019 Survey – Generic

1

mailto:[email protected]


A U S T R A L I A N M O R T G A G E C O U N C I L

• The Australian Mortgage Council (AMC) is a quarterly survey conducted online in March, June, September and

December.

• Data in this report has been sourced from the survey conducted in March 2019.

• In total, 2,101 mortgage holders (borrowers) took part of which 1520 people who took out their most recent mortgage

on their home (Homeowners) and 581 people who took out their most recent mortgage on an investment property

(Investment property owners). Respondents are nationally representative of the mortgage market by:

• Age

• Gender

• State/ Territory

• Where appropriate, significance testing at the 95% level has been conducted, comparing results over time or between

segments. Significant differences have been marked throughout the report with red and green arrows where ↓ =

Significantly lower and ↑ = Significantly higher

• Further data cuts are available on request

Survey methodology

8



Types of borrowers – definitions

9

First Home Buyer (FHB)

A respondent who has a mortgage

on their home and it is the first

owner-occupier mortgage they

have taken out, regardless of loan

tenure

Investor:

A respondent whose most

recent mortgage is on an

investment property (not the

home they live in)

Refinancer:

A respondent who has

refinanced their mortgage

on their home and is not a

FHB

Subsequent:

A respondent whose most recent

mortgage is an owner occupier

loan, is not a first home buyer and

has not refinanced

Segments are mutually exclusive and make up the total market

www.rfigroup.com Copyright Retail Finance Intelligence Pty Limited Commercial in Confidence 10

Market context



Key market developments

11

Key developments in the last quarter that affect the mortgage market

July 2018

Big 4 banks required to

submit positive data for

Comprehensive Credit

Reporting (CCR)

August 2018

Westpac, ANZ, and CBA

announce out of cycle rate

increases. NAB commit to

keeping rates unchanged

October 2018

On a national basis,

property prices fall 4.8 per

cent. National dwelling

values have slumped 5.2

per cent since their peak in

October 2017.

September 2018

UBank increase

mortgage rates on

fixed-interest products

February 2019

The final report from the

Royal Commission is

released, 76

recommendations made all

of which are supported by

the Federal government

January 2019

NAB announces out of

cycle rate increase



First home buyers

13

The average loan size for FHB’s has increased by 2.8% in the 12 months to Nov-18, whereas the average loan size for Non FHB’s has decreased by 1.7% over the same period

$336,500

$395,500

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

Ma

r-2

01

3

Jul-

20

13

No

v-2

01

3

Ma

r-2

01

4

Jul-

20

14

No

v-2

01

4

Ma

r-2

01

5

Jul-

20

15

No

v-2

01

5

Ma

r-2

01

6

Jul-

20

16

No

v-2

01

6

Ma

r-2

01

7

Jul-

20

17

No

v-2

01

7

Ma

r-2

01

8

Jul-

20

18

No

v-2

01

8

Average loan sizes

FHB Non-FHB

Monthly and yearly change

Nov-17 Oct-18 Nov-18 Monthly change Yearly change

Proportion of FHB loans 18.0% 18.1% 18.3% 0.2ppt 0.3ppt

FHB average loan size 327,200 338,900 336,500 -0.7% 2.8%

Non-FHB average loan size 402,300 396,800 395,500 -0.3% -1.7%

Source: ABS

18.3

0.0

5.0

10.0

15.0

20.0

25.0

Ma

r-2

01

1Ju

l-2

01

1N

ov-

20

11

Ma

r-2

01

2Ju

l-2

01

2N

ov-

20

12

Ma

r-2

01

3Ju

l-2

01

3N

ov-

20

13

Ma

r-2

01

4Ju

l-2

01

4N

ov-

20

14

Ma

r-2

01

5Ju

l-2

01

5N

ov-

20

15

Ma

r-2

01

6Ju

l-2

01

6N

ov-

20

16

Ma

r-2

01

7Ju

l-2

01

7N

ov-

20

17

Ma

r-2

01

8Ju

l-2

01

8N

ov-

20

18

First home buyer loans as % of all loans



Fixed rate loans

14

The proportion of fixed rate loans in the market decreased by 0.4% to 16.3% in from Oct-17 to Oct-18

Source: ABS and RBANote: Monthly data used from ABS and RBA

16.3%

4.11%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Ma

r-2

01

3

Jun

-20

13

Se

p-2

01

3

De

c-2

01

3

Ma

r-2

01

4

Jun

-20

14

Se

p-2

01

4

De

c-2

01

4

Ma

r-2

01

5

Jun

-20

15

Se

p-2

01

5

De

c-2

01

5

Ma

r-2

01

6

Jun

-20

16

Se

p-2

01

6

De

c-2

01

6

Ma

r-2

01

7

Jun

-20

17

Se

p-2

01

7

De

c-2

01

7

Ma

r-2

01

8

Jun

-20

18

Se

p-2

01

8

3-year fixed lending rate & proportion of fixed rate loans

Proportion of fixed rate loans (LHS)

3-year fixed lending rate Owner Occupier only (RHS)

Monthly and yearly change

Oct-17 Sep-18 Oct-18Monthly change

Yearly change

3-year fixed lending rate

4.12% 4.11% 4.11% 0.00ppt -0.10ppt

Proportion of fixed rate loans

16.70% 14.60% 16.30% 1.70ppt -0.40ppt



Intention to fix

15

Furthermore, almost 1 in 3 borrowers indicate they are likely to fix their rates in the next 12 months

Base: Borrowers (Mar-10: n=1,870, Jun-10: n=1,786, Dec-10, n=1,814, Mar-11: n=1,806, Jun-11: n=1,845, Dec-11: n=1,782, Mar-12, n=1, 729, Jun-12: n=1,866, Sep-12: n=1,847, Dec-12: n=1,741, Mar-13: n=1,757, Jun-13: n=1,793, Sep-13: n=1,705, Dec-13: n=1,830, Mar-14: n=1,700, Jun-14: n=1,785, Sep-14: n=1,715, Dec-14: n=1,692, Mar-15: n=1,735, Jun-15: n=1,792, Sep-15: n=1,738, Jun-16: n=1,741, Sep-16: n=1,728, Dec-16: n=1694, Mar-17: n=1,713, Jun-17: n=1,706, Sep-17: n=1,685, Dec-17: n=1,711, Mar-18: n=1,752, Jun-18: n=1,719, Sep-18: n=1,727, Dec-18: n=1,693, Mar-19: n=1,731). Note: Respondents who selected ’Don’t know’ were removed from analysis. Note^: This data has been averaged on a quarterly basis

31%

13%

0%

1%

2%

3%

4%

5%

6%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Ma

r-1

0

Jun

-10

De

c-1

0

Ma

r-1

1

Jun

-11

De

c-1

1

Ma

r-1

2

Jun

-12

Se

p-1

2

De

c-1

2

Ma

r-1

3

Jun

-13

Se

p-1

3

De

c-1

3

Ma

r-1

4

Jun

-14

Se

p-1

4

De

c-1

4

Ma

r-1

5

Jun

-15

Se

p-1

5

De

c-1

5*

Ma

r-1

6*

Jun

-16

Se

p-1

6

De

c-1

6

Ma

r-1

7

Jun

-17

Se

p-1

7

De

c-1

7

Ma

r-1

8

Jun

-18

Se

p-1

8

De

c-1

8

Ma

r-1

9

Off

icia

l R

BA

ca

sh r

ate

And how likely are you to fix your interest rate in the next 12 months?

Likely Proportion of fixed rate loans ^ (ABS) Official RBA cash rate



3rd Party origination

16

Mortgage brokers account for just over 1 in 2 new residential loan approvals

Source: APRA

Note: Data looks at credit unions and banks with greater than $1bn of term loans

Dec-18,

52%

Dec-18,

38%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jun

-08

Se

p-0

8

De

c-0

8

Ma

r-0

9

Jun

-09

Se

p-0

9

De

c-0

9

Ma

r-1

0

Jun

-10

Se

p-1

0

De

c-1

0

Ma

r-1

1

Jun

-11

Se

p-1

1

De

c-1

1

Ma

r-1

2

Jun

-12

Se

p-1

2

De

c-1

2

Ma

r-1

3

Jun

-13

Se

p-1

3

De

c-1

3

Ma

r-1

4

Jun

-14

Se

p-1

4

De

c-1

4

Ma

r-1

5

Jun

-15

Se

p-1

5

De

c-1

5

Ma

r-1

6

Jun

-16

Se

p-1

6

De

c-1

6

Ma

r-1

7

Jun

-17

Se

p-1

7

De

c-1

7

Ma

r-1

8

Jun

-18

Se

p-1

8

De

c-1

8

Proportion of total new residential loans that are third-party (broker) originated

Bank Credit Unions & Building Societies



Consumer sentiment

17

The Westpac-Melbourne Institute Consumer Sentiment Index recovered in February after a drop in early 2019

Source: Westpac-Melbourne Institute

70.0

80.0

90.0

100.0

110.0

120.0

130.0

Feb-2010 Feb-2011 Feb-2012 Feb-2013 Feb-2014 Feb-2015 Feb-2016 Feb-2017 Feb-2018 Feb-2019

Westpac - Melbourne Institute Consumer Sentiment Index

Julia Gillard

becomes PM

Gillard wins election,

hung parliament

QLD floods,

Cyclone Yasi

Carbon tax

introduced

Abbott

becomes PM

Rudd wins

leadership

spill

Sharp fall in

petrol prices

Federal

budgetTurnbull

becomes PM

OPEC reaches

deal to cut oil

production

Trump elected

as President

Morrison becomes PM

Royal

Commission

Royal

Commission full

report released

Resignation of NAB CEO

and Chairman

Bank levy

announced in

2017 Federal

Budget



Mortgage stress

18

Expectations of mortgage stress is highest amongst borrowers in Western Australia, Queensland and Victoria

Base 1: Borrowers (Jun-16: n= 1952,Sep-16: n=2,021, Dec-16: n=1,880, Mar-17: n=1,886, Jun-17: n=1,928, Sep-17: n=1,920, Dec-17: n=1,945, Mar-18: n=1,942, Jun-18: n=1,964, Sep-18: n=1,954, Dec-18: n=1,904, Mar-19: n=2,101). Base 2: Borrowers (Mar-19: WA: n=233, QLD: n=438, VIC: n=513, NSW: n=524, SA: n=184, ACT: n=54, TAS: n=55, Total: n=2,101); Note: NT was not shown due to insufficient sample Note: Respondents who selected ’I don’t know’ were removed from analysis. Note: Tests for significance were carried out for this question; no significant differences were found

15%

0%

10%

20%

30%

40%

50%

Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19

Mortgage stress (% who expect to struggle with repayments in N12M)

19%16% 16% 15% 13%

7% 7%

15%

0%

10%

20%

30%

40%

50%

WA QLD VIC NSW SA ACT TAS Total

By state/ territory

Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19


Key focus area – Royal commission’s impact on mortgage lending


Who is aware of the Royal Commission, how has it impacted trust and consideration?



Awareness of the Royal Commission

21

19% 25% 28% 36%

59% 60%39%

44%

56% 56%54%

36% 35%

49%

37%19% 16% 10% 5% 5% 12%

0%

50%

100%

18-24 25-34 35-44 45-54 55-64 > 64 Total

No - I was not aware of itYes - I am vaguely aware of it but am not following it closelyYes - I am aware of it and have closely followed the findings of the commission

Before today, were you aware of the Royal Commission into banking?

By Age

Base 1: Borrowers (Mar-19: 18-24: n=57, 25-34: n=326, 35-44: n=535, 45-54: n=548, 55-64: n=424, > 64: n=211, Total: n=2,101)Base 2: Borrowers (Mar-19: ACT: n=56, TAS: n=55, NSW: n=547, QLD: n=457, VIC: n=537, SA: n=190, WA: n=248, Total: n=2,101)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total

54%44% 40% 39% 38% 38% 33% 39%

38%45% 48% 51% 48% 47% 54% 49%

9% 11% 12% 11% 14% 15% 12% 12%

0%

50%

100%

ACT TAS NSW QLD VIC SA WA Total

By State

Older borrowers were more likely to have been aware of the royal commission and closely followed the findings, compared to younger borrowers. Also borrowers in ACT, TAS and NSW were most likely to have been aware and closely followed the royal commission



Does awareness vary by borrower segments?

22

Base: Borrowers (Mar-19: Investor: n=581, Refinancer: n=268, Subsequent: n=652, FHB: n=600, Total: n=2,101)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total

Investors and Refinancers were significantly more likely to have been aware and closely followed the findings from the royal commission, whereas FHB were significantly more likely to have not been aware of the royal commission at all

45% 44% 41%

28%

39%

45% 46%48%

55%

49%

10% 10% 11%17%

12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Investor Refinancer Subsequent FHB Total

Borrowers not aware of the commission at all Borrowers vaguely aware of the commission

Borrowers aware of and closely following the commission

Before today, were you aware of the Royal Commission into banking?

By Borrower segments



To what extent do borrowers trust their lender?

23

Base: Borrowers (Mar-18: n=2,031, Jun-18: n=2,058, Sep-18: n=2066, Dec-18: n=2004, Mar-19: Bendigo Bank: n=43, Suncorp: n=72, ME: n=43, ING: n=82, St. George: n=77, Westpac: n=246, ANZ: n=294, CBA: n=458, Bankwest: n=69, NAB: n=244, Total: n=2,101)Note: Tests for significance were carried out for this question; ↑ Significantly higher than Dec-18↓; Significantly lower than Dec-18

Overall, non-Big 4 lenders are more highly trusted

72%

67%

60% 59%

53%48%

44% 44% 43% 43%

49%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Bendigo Bank Suncorp ME ING St. George Westpac ANZ CBA Bankwest NAB Total

Please indicate the extent to which you trust your most recent lender overall

Highly trust (8-10 out of 10) – By Top 10 most recent lenders

Trended

Mar-18 Jun-18 Sep-18 Dec-18 Mar-19

ME increased

rates on

home loans

in Jun-18



Trust – Direct vs. Broker

24

Among broker originated borrowers, trust has declined for lenders however trust has increased for brokers

Please indicate the extent to which you trust your most recent lender and broker

Highly Trust (8-10/10) - Direct vs. Broker - Trended

Base: Borrowers (Sep-18: n=2066, Dec-18: n=2004, Mar-19: n= Direct borrowers: n= 1352, Broker orginated borrowers: n=525, Total: n=2101) Note: Tests for significance were carried out for this question; ↑ Significantly higher than Dec-18↓; Significantly lower than Dec-18

Trust levels with brokerTrust levels with lender

58%

52%

62%57%

47%

59%

54%

42%

65%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Direct Borrowers Broker-originated borrowers Broker-originated borrowers

Sep-18 Dec-18 Mar-19



What impact does awareness have on consideration?

25

Base: Borrowers (Mar-19: Borrowers aware of and closely following the commission: n=811, Borrowers vaguely aware of the commission: n=1,029, Borrowerswho are not aware of the commission : n=261, Total: n=2,101)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total

Those who are aware of the royal commission and closely followed the findings were significantly less likely to be willing to consider all types of lenders, whereas those who were not aware were significantly more likely to be willing to consider all lenders

38% 37%32%

24%19%

16%

37%33%

24% 26%

20% 18%13%

44%

19%14%

18% 18%15% 14%

59%

33%28% 28%

22%18%

14%

43%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Big 4 Other Banks Regionals Non Banks Mutuals Online Banks I would be willing to

consider all lenders

Borrowers aware of and closely following the commission Borrowers vaguely aware of the commission

Borrowers not aware of the commission at all Total

Are there any lenders you would be unwilling to consider to obtain a mortgage for the home you live in?

By Awareness of the Royal Commission



Will it effect refinancing/ switching intentions?

26

Almost 1 in 4 borrowers who are aware of the royal commission and closely followed the findings are likely to refinance their most recent loan, however more than half of those intend on doing so internally

Base: Borrowers (Mar-19: Borrowers aware of and closely following the commission: n=811, Borrowers vaguely aware of the commission: n=1,029, Borrowers not aware of the commission at all: n=261, Total: n=2,101)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total

12%

7%4%

8%

3%

3%3%

3%

7%

8% 10%

8%

22%

17% 17%19%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Borrowers aware of and closely

following the commission

Borrowers vaguely aware of the

commission

Borrowers not aware of the commission

at all

Total

How likely would you be to refinance your mortgage in the next 12 months?

When you refinance your mortgage, will you?


Remain with your existing provider Switch your home loan provider I am not sure Highly likely to refinance



3%10%

18%

29%

44%49%

56%

73%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0.19% or less 0.20 - 0.29% 0.30 - 0.39% 0.40 - 0.49% 0.50 - 0.59% 0.60 - 0.79% 0.80 - 0.99% 1.00% or more

Pro

po

rtio

n o

f b

orr

ow

ers

wh

o c

an

be

en

cou

rag

ed

(Cu

mu

lati

ve

)

Rate difference required

Borrowers aware of and closely following the commission Borrowers vaguely aware of the commission

Borrowers not aware of the commission at all Total

Aware and

followed

findings

closely

Vaguely

awareNot aware Total

% who would

not switch

lenders for

lower rate

26% 25% 35% ↑ 27%

How willing would they be to switch for lower rate?

27

3 in 4 borrowers who are aware the royal commission and followed the findings closely would switch for lower rates, whereas those who are not aware of the royal commission are significantly more likely to not switch purely based on interest rates

Base: Borrowers (Mar-19: Borrowers aware of and closely following the commission: n=811, Borrowers vaguely aware of the commission: n=1,029, Borrowers who are not aware of the commission : n=261, Total: n=2,101)Note: Respondents who said ‘I am not sure’ have been removed from analysis Note: Tests for significance were carried out for this question; ; ↑ Significantly higher than Total↓ Significantly lower than Total

If you saw a lower mortgage rate at another institution, at what point would you consider switching your

mortgage?


Cumulative proportion of borrowers who can be incentivised by this rate discount


What would be the impact of implementing an upfront fee to use brokers?



What % of borrowers would prefer to use a broker?

29

44% 42% 37% 29% 27% 37%

56% 58% 63% 71% 73% 63%

0%

50%

100%

18-34 35-44 45-54 55-64 > 64 Total

If you were to apply for your mortgage today, which channel would you most prefer to apply through?

By Age

Apply through broker Apply directly to a lender

Younger borrowers and those who hold their most recent loan with Bankwest and ING are significantly more likely to prefer applying through a broker

Base 1: Borrowers (Mar-19: 18-34: n=383, 35-44: n=535, 45-54: n=548, 55-64: n=424, > 64: n=211, Total: n=2,101)Base 2: Borrowers (Mar-19: Bankwest: n=69, ING: n=82, Suncorp: n=72, St. George Bank: n=77, CBA: n=458, NAB : n=244, ME : n=43, Westpac : n=246, ANZ : n=294, Bendigo Bank : n=43, Total: n=2,101) Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total

62% 54% 43% 38% 37% 36% 35% 35% 34%14%

37%

38% 46% 57% 62% 63% 64% 65% 65% 66%86%

63%

0%

50%

100%

Bankwest ING Suncorp St. George

Bank

CBA NAB ME Westpac ANZ Bendigo Bank Total

If you were to apply for your mortgage today, which channel would you most prefer to apply through?

By Top 10 most recent lenders

Apply through broker Apply directly to a lender



Why do borrowers use brokers?

30

34% 33% 31% 30% 29% 28%26% 25%

20% 19% 18%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Brokers have

access to

better rates

from lenders

It was more

convenient

They could

make me

aware of

lenders I

might

otherwise be

unaware of

They could

guide me

through the

application

process

They could

provide me

with the best

advice with

regards to my

home lending

needs

To be able to

find the right

product with

features

relevant to my

needs

I had a

previous good

experience

with a broker

A broker was

recommended

by family &

friends

I felt it would

be easier to

get my loan

approved if I

used a broker

The process is

faster with a

broker

Brokers offer

better

customer

service

Why did you apply for your most recent loan through a broker instead of directly with the lender?

Ranked Top 3 - Broker applicants


FHB Investor Refinancer Subsequent Total

Base: Broker applicants (Mar-19: FHB: n=129, Investor: n=160, Refinancer: n=65, Subsequent: n=171, Total: n=525)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total

First home buyers were significantly more likely than other segments to have used a broker because they could guide them through the application process and because a broker was recommended to them by family & friends



How much would they be willing to pay brokers?

31

$689

$264 $233 $217

$319

18-34 35-44 45-54 55+ Total

By Age

Imagine all brokers charged an upfront fee to provide you with advice on a mortgage and process your

application. In this scenario, what is the maximum you would be willing to pay to use a broker?

$502

$289 $249

$207

$319



Older borrowers, and subsequent borrowers would be willing to pay brokers significantly less than all other borrowers

Base: Borrowers (Mar-19:18-34: n=383, 35-44: n=535, 45-54: n=548, 55+: n=635, FHB: n=600, Investor: n=581, Refinancer: n=268, Subsequent: n=652, Online: n=236, Mobile lender: n=208, Broker: n=525, Branch: n=777, Phone: n=131, NSW: n=547, QLD: n=457,VIC: n=537, ACT: n=56, WA: n=248, TAS: n=55, SA: n=190, Total: n=2,101)Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total

27% of borrowers indicated that

they would not be willing pay an application fee to brokers



32

$484 $467

$362

$254 $208

$319

Online Mobile

lender

Broker Branch Phone Total

By Application Channel for most recent loan

67% borrowed less than

$500,000

Base: Borrowers (Mar-19:Online: n=236, Mobile lender: n=208, Broker: n=525, Branch: n=777, Phone: n=131, Apply through broker : n=776, Apply directly to a lender : n=1,325, Total : n=2,101, Total: n=2,101)Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total

Does this vary by previous and preferred application channel?Borrowers who applied through a phone for their most recent loan and those who would prefer to apply directly to a lender if they had to apply for a mortgage today would pay brokers less than other borrowers

$361

$295 $319

Apply through broker Apply directly to a lender Total

By Preferred application channel if they had

to apply for a mortgage today

Imagine all brokers charged an upfront fee to provide you with advice on a mortgage and process your

application. In this scenario, what is the maximum you would be willing to pay to use a broker?



How will borrowers respond to upfront fees?

33

20%24%

45%

68%

12%15%

28%

35%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Brokers charge a $2,000 fee, payable

upfront. The lender does not charge a

fee

Brokers and lenders both charge a

$2,000 fee payable upfront. Lenders

offer $2,000 cashback for taking out

the loan with them


$2,000 fee. Brokers charge the fee

upfront and lenders add the fee onto

your loan amount


$2,000 fee, payable upfront

How would you be most likely to apply for a mortgage if either your lender or broker charged an upfront

application fee?

% who would apply through broker

Broker applicants All borrowers

More than 2 in 3 borrowers who applied through a broker previously would still apply their a broker if both brokers and lenders charge a upfront fee

Base : Borrowers (Mar-19: Broker applicants: 525, Total; n= 2011)



Do preferences vary by age and borrower segments?

34

Base 1: Borrowers (Mar-19: 18-24: n=57, 25-34: n=326, 35-44: n=535, 45-54: n=548, 55-64: n=424, > 64: n=211, Total: n=2,101)Base 2: Borrowers (Mar-19: Investor: n=581, Refinancer: n=268, Subsequent: n=652, FHB: n=600, Total: n=2,101)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total

45%

24%

0%

10%

20%

30%

40%

50%

18-34 35-44 45-54 55-64 > 64

By Age

Would approach a Broker

39%35%

Investor Refinancer Subsequent FHB Total


Would approach a Broker

How would you be most likely to apply for a mortgage if brokers and lenders both

charge a $2,000 fee, payable upfront?

Younger borrowers and Investors would be significantly more likely to apply through a broker if brokers and lenders both charge a $2,000 fee payable upfront, whereas FHB would be significantly more likely to apply via a broker even if only they charged a fee

How would you be most likely to apply for a mortgage if brokers charge a $2,000

fee, payable upfront and the lender does not charge a fee?

22%

7%

0%

10%

20%

30%

40%

50%

18-34 35-44 45-54 55-64 > 64

15%12%




Preference for paying a mandatory application fee

35

43%

26%

32%

41%

19%

40%38%

18%

44%

35%

23%

42%

31%

23%

45%

38%

21%

41%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Added onto your loan, where your loan value would

increase by $2,000

All at once, where you pay $2,000 upfront I am not sure

Imagine all loans have an application fee charged by either your lender or broker depending on who you

applied through. How would you prefer to pay this fee?

By Age

18-34 35-44 45-54 55-64 > 64 Total

Base: Borrowers (Mar-19: 18-24: n=57, 25-34: n=326, 35-44: n=535, 45-54: n=548, 55-64: n=424, > 64: n=211, Total: n=2,101)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total

Younger borrowers are more likely to prefer for the application fee to be added onto their loan compared to older borrowers



What would those who won’t approach a broker do?

36

69%63%

34%

77%69%

14% 22%

20%

13%

15%

16% 15%

46%

10%16%

0%

20%

40%

60%

80%

100%

Borrowers aware of

the Royal Commission

Borrowers not aware

of the Royal Commission

Borrowers who do not trust

their lender (0-2)

Borrowers who trust their

lender completely (8-10)

Total

Would approach MFI

Would approach a FI they have a relationship with

Would approach a FI they don’t have a relationship with

Almost 4 in 5 borrowers who would not approach a broker if they charged them a $2,000 application fee and highly trust their most recent lender would approach their MFI

Base: Borrowers who would not approach a broker (Mar-19: "Borrowers aware of the Royal Commission: n=1,630, Borrowers not aware of the Royal Commission: n=213, Borrowers who do not trust their lender (0-2): n=95, Neutral (3-7): n=836, Borrowers who trust their lender completely (8-10): n=912, Total: n=1,843")Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total

54% of borrowers who highly trust their lender hold their most recent loan with a Big 4 bank

You have indicated that you would not approach a broker if they charged you a $2,000 fee to process your application. If you were

applying for your mortgage in this scenario, how would you most likely go about finding a lender?

Borrowers who would not approach a broker

By Whether they are aware of the Royal Commission and extent to which they trust their most recent lender


• Acquisition

• Engagement, Satisfaction, Advocacy & Retention

• Switching & Refinance Intention

Market report


Acquisition



39

Base: Borrowers (Dec-16: n=2,000, Mar-17: n=2,005, Jun-17: n=2,020, Sep-17: n=2,067, Dec-17: n=2,051, Mar-18: n=2,031, Jun-18: n=2,058, Sep-18: n=2,066, Dec-18: n=2,004, Mar-19: n=2,101) Note: Tests for significance were carried out for this question, ↑ Significantly higher than Dec-18, ↓ Significantly lower than Dec-18

17%

10%9%

8% 7%5% 4% 4% 3% 3% 3% 2% 2% 2% 2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

CBA ANZ NAB ING Westpac Aussie

Home

Loans

ME Bendigo

Bank

Credit

Unions

Bankwest St. George

Bank

Suncorp

Bank

Mutual

Banks

UBank RAMS

If you did not have a mortgage and you needed to obtain a mortgage for the home you live in, which is the first

institution that you would approach?

Top 15 lenders

Trended

Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Mar-19

Top of mind considerationCBA was the only lender that experienced a significant increase in top of mind consideration over the Mar-19 quarter, also ING’s consideration has been trending onwards since Dec-16 and it has now overtaken Westpac to be amongst the top 4 lenders for top of mind consideration



How has consideration changed?

43%

16%

13%

9% 8%

3%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Big 4 Regionals Online banks Mutuals Non-banks Other banks

If you did not have a mortgage and you needed to obtain a mortgage for the home you live in, which is the

first institution that you would approach?

Trended

Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19

Base: Borrowers (Mar-17: n=2,005, Jun-17: n=2,020, Sep-17: n=2,067, Dec-17: n=2,051, Mar-18: n=2,031, Jun-18: n=2,058, Sep-18: n=2,066, Dec-18: n=2,004, Mar-19: n=2,101) Note: Tests for significance were carried out for this question: ▲ Significantly higher than Dec-18 ▼ Significantly lower than Dec-18

Future consideration for non-big four players has increased over the last two years with almost 3 in 5 borrowers now saying they would approach a Non-Big 4 bank first

47% 43%

52% 57%

Mar-17 Sep-17 Mar-18 Sep-18 Mar-19

Big 4 vs. Non-Big 4



Drivers of lender choice

41

Broker recommendation and price (most competitive interest rates) have been the most important drivers of lender choice for borrowers who took out their loan in the last two years

Base: Borrowers who took out their most recent loan within the last two years. (Mar-19: n=434)

17%

16%

13%

8%

4%

4%

3%

5%

4%

2%

6%

4%

2%

6%

6%

4%

3%

3%

2%

3%

2%

1%

2%

2%

3%

5%

4%

2%

2%

2%

25%

21%

17%

16%

13%

13%

10%

10%

8%

7%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

They were recommended by my broker

They were offering the most competitive interest rates

They were my Main Financial Institution for personal banking

They had the lowest fees

They offered an offset account

I trust this institution

They offered mortgages with product features that were most relevant to me

I already had a mortgage with them

Family/friends recommended them

I could negotiate with them

Why did you choose your most recent lender?

Top 10 reasons – Loans taken out within the last two years

Rank 1 Rank 2 Rank 3 Top 3

Ranked as the most important driver of choice in Dec-18



Product-related drivers of lender choice

42

The most important product-related drivers of home loan choice are the ability to make overpayments, 100% offset account and no application fee

Base: Borrowers who took out their most recent loan within the last two years. (Mar-19: n=434)

17%

14%

10%

5%

8%

6%

4%

4%

5%

5%

14%

14%

8%

8%

5%

7%

5%

4%

5%

4%

12%

11%

10%

10%

4%

5%

6%

4%

2%

3%

43%

39%

28%

23%

18%

18%

15%

12%

12%

12%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Ability to make overpayments

100% offset account

No application fee

Access to a redraw facility

Recommendation by broker

Ability to fix all or part of the loan

Straightforward application process

An existing relationship with the financial institution

Maximum available loan amount

Interest only option

Aside from interest rates, what do you see as the top most important factors in choosing the right home loan?

Rank – Top 10

Loans taken out within the last two years

Rank 1 Rank 2 Rank 3 Top 3



Research channels

43

Almost 2 in 5 borrowers who took out their most recent within the last year spoke to a broker when researching, while the proportion of borrowers using online research methods such as Canstar Cannex star ratings has increased over time

Base: Borrowers (Mar-19: More than 10 years ago: n=526, Between 5 and 10 years ago: n=491, Between 3 and 5 years ago: n=372, Between 2 and 3 years ago: n=230, Between 1 and 2 years ago: n=222, Within the last year: n=212, Total: n=2,101)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than TotalNote: Borrowers who selected ‘I am not sure’ for the loan tenure question were removed from analysis

28%

20%18%

16% 16%

10%9%

8% 8%7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Spoke to a

broker

FI websites Friends &

family

FI branches Google Comparison

website

Financial

planner

Broker website Realestate

.com.au

Canstar Cannex

star ratings

Which sources of information did you use when researching your most recent loan?

Top 10 Sources

By Loan tenure

More than 10 years ago Between 5 and 10 years ago Between 3 and 5 years ago Between 2 and 3 years ago

Between 1 and 2 years ago Within the last year Total



34%

24%22%

19%

15%14%

10% 9% 9% 9%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Spoke to a

broker

FI websites Google Friends & family Comparison

website

FI branches Broker website Realestate

.com.au

Canstar Cannex

star ratings

Financial

planner

Which sources of information did you use when researching your most recent loan?

Top 10 sources – Within last two years

By borrower segments


Research channels

44

Borrowers are most likely to conduct research by speaking to a broker ; Subsequent borrowers tend to utilise fewer sources of information on average when conducting research compared to other borrower segments, but they were significantly more likely to have spoken to a broker

Base: Borrowers who took out their most recent loan within the last two years (Mar-19: FHB: n=125, Investor: n=131, Refinancer: n=57, Subsequent: n=121, Total: n=434)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total

Average number of sources used for research


2.3 ↑ 2.0 1.8 1.9↓ 2.0



Channels for enquiries

45

Broker has overtaken branch as the most used enquiry channels for mortgages, also the use of brokers has been trending onwards over time to the point where more than 2 in 5 borrowers who took out their loan in the last year used them to have enquires

18%

42%44%

27%

18%

22%

15%

12%10%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

More than 10 years ago Between 5 and 10 years

ago

Between 3 and 5 years

ago


ago


ago

Within the last year

What channels did you use to make enquiries when you were looking for your mortgage?

By loan tenure

Broker Branch Online Phone Mobile lender

Base: Borrowers (Mar-19: More than 10 years ago: n=526, Between 5 and 10 years ago: n=491, Between 3 and 5 years ago: n=372, Between 2 and 3 years ago: n=230, Between 1 and 2 years ago: n=222, Within the last year: n=212, Total: n=2,101)Note: Borrowers who selected ‘I am not sure’ for the loan tenure question were removed from analysis



Satisfaction – loan application process

46

Borrowers who applied via a mobile lender are most likely to be highly satisfied with their application experience, however over Mar-19 quarter the proportion of borrowers who applied through this channel or via a branch and were highly satisfied has decreased significantly

Base: Borrowers who took out their loan within the last 2 years (Sep-18: n=502, Dec-18: n=449 , Branch: n=122, Mobile lender: n=32, Online: n=72, Broker: n=151, Total: n=434) Note:Tests for significance were carried out for this question, ↑ Significantly higher than Dec-18, ↓ Significantly lower than Dec-18Note: Respondents who selected ‘I’m not sure’ for the application channel and loan tenure question have been removed from analysisNote: *Small sample size (n<30); indicative only

63% 62% 61%56% 54%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Mobile Lender Phone* Branch Online Broker

How satisfied were you with the overall loan application process?

Loans taken out within the last 2 years - % Highly Satisfied (8-10)

By final application channel - Trended

Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19



Satisfaction – loan application process

47

Key

1Understanding of the mortgage application process

2Communication/updates on the status of your application

3 Ease of providing documentation

4 Speed of the application process

5 Ease of obtaining a pre-approval

6 Ease of obtaining a full approval

7Confidence in the mortgage product (i.e it was the right loan for you)

8 Security/privacy of your information

9 Customer Service

12

3

4

5 6

7

8

9

6.50

7.00

7.50

8.00

0.65 0.85

Sa

tisf

act

ion

(m

ea

n s

core

ou

t o

f 1

0)

Correlation with overall satisfaction

Satisfaction vs Correlation

Loan application process –Borrowers who took out their loan in the last 2 years

Base: Borrowers who took out their loan within the last 2 years (Mar-19: n=434)Note: █ = ‘Pain points’ for the particular segment in question

Key pain point for borrowers include communication on application status, speed of the application process and the ease of obtaining a pre-approval



39% 41%36% 36%

25%

0%

10%

20%

30%

40%

50%

18-34 35-44 45-54 55-64 65-80

How likely would you be to complete and submit a mortgage application entirely via an online channel?

Highly likely (8-10 out of 10)

Online mortgage appetite

48

More than 2 in 5 borrowers aged between 35 and 44 would be highly likely submit a mortgage application entirely online, whereas only 1 in 4 borrowers aged 65 or above would be highly likely to do the same

Base 1: Borrowers (Mar-16: n=1,924, Sep-16: n=2,108, Dec-16: n=2,000, Mar-17: n=2,005, Jun-17: n=2,020, Sep-17: n=2,067, Dec-17: n=2,051, Mar-18: n=2,031, Jun-18: n=2,058, Sep-18: n=2,066, Dec-18: 2,004, Mar-19: 2,101) Note^: Data has been aggregated over 4 wavesBase 2: Borrowers (Mar-19: n= 18-34: n=383, 35-44: n=535, 45-54: n=548, 55-64: n=424, 65-80: n=211, Total: n=2,101)Note: Tests for significance were carried out for this question, ↑ Significantly higher than Total, ↓ Significantly lower than Total

28%32% 34% 35% 34% 35% 34% 35% 33% 33% 33% 34%

0%

10%

20%

30%

40%

50%

Mar-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19

How likely would you be to complete and submit a mortgage application entirely via an online channel?^

Highly likely (8-10 out of 10) – Trended

12 month rolling average^


Switching & Refinance Intention



Refinancing/ switching intention

50

Refinancing intention has significantly decreased since Dec-18, a result of the out-of-cycle rate increases imposed by many lenders and the decrease in trust from the Royal Commission findings.

21%

19%

1.5%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

0%

5%

10%

15%

20%

25%

30%

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19


Highly likely (8-10 out of 10). By homeowners vs investors

Homeowners Investors Total Official RBA cash rate (RHS)

Base: Borrowers (Sep-14: n=2,011, Dec-14: n=2,021, Mar-15: n=2,037, Jun-15: n=2,070, Sep-15: n=2,036, Dec-15: n=2,033, Mar-16: n=2,023, Jun-16: n=2,027, Sep-16: n=2,011, Dec-16: n=2,000, Mar-17: n=2,005, Jun-17: n=2,020, Sep-17: n=2,067, Dec-17: n=2,051, Mar-18: n=2,031, Jun-18: n=2,058, Sep-18: n=2.066, Dec-18: n=2,004, Mar-19: =Homeowners: n=1,520, Investors: n=581, Total: n=2,101)Note: Tests for significance were carried out for this question; no significant different were found

Jul/Aug-18: Many of the non-big 4 banks

announce out-of-cycle rate increases.

Sep-18: The Big 4 banks announce out of

cycle rate increases.

2016-17: Mortgage repricing

throughout the market

Feb/Mar-18: Royal Commission findings

being reported in media and ACCC interim report on mortgage pricing

released



Refinancing/ switching intention

51

ING and Bendigo Bank borrowers are the most likely to refinance in the next 12 months, however 2 in 5 ING borrowers intending on switching internally whereas 3 in 5 Bendigo Bank borrowers intend on doing the same

Base: Borrowers (Mar-19: ING: n=82, Bendigo Bank: n=43, Suncorp : n=72, ANZ: n=294, Bankwest: n=69, CBA: n=458, NAB : n=244, Westpac : n=246, St. George : n=77, ME : n=43, Total: n=2,101) Note: Tests for significance were carried out for this question; ↑ Significantly higher than Total ↓ Significantly lower than Total

14%

20%

11% 10%5%

8% 8% 7% 5% 4%8%

2%

2%2%

2%

3% 3%3%

2%3%

3%

16%13%

11%

8%

12%7% 7% 8%

7% 7%

8%

33% 33%

24%

19% 19% 18% 18% 18%

14% 14%

19%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

ING Bendigo Bank Suncorp ANZ Bankwest CBA NAB Westpac St. George ME Total


When you refinance your mortgage, will you?

By Top 10 Most recent lenders

Remain with your existing provider Switch your home loan provider I am not sure Highly likely to refinance



19%

12%

0%

5%

10%

15%

20%

25%

30%

Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19

How likely would you be to refinance your mortgage in the next 12 months? Highly likely (8+/10)

Have you refinanced your mortgage in the last 12 months? Yes

Trended

Highly likely (8+/10) to refinance in N12M Have refinanced in L12M

How does intention compare to behaviour?

Base: Borrowers (Dec-14: n=2,021, Mar-15: n=2,037, Jun-15: n=2,070, Sep-15: n=2,036, Dec-15: n=2,033, Mar-16: n=2,023, Jun-16: n=2,027, Sep-16: n=2,011, Dec-16: n=2,000, Mar-17: n=2,005, Jun-17: n=2,020, Sep-17: n=2,067, Dec-17: n=2,051, Mar-18: n=2,031, Jun-18: n=2,058, Sep-18: n=2.066, Dec-18: n=2,004, Mar-19: n=2,101)Note: Tests for significance were carried out for this question: ▲ Significantly higher than Dec-18 ▼ Significantly lower than Dec-18

The gap between intention to refinance and actual refinancing has narrowed over the Mar-19 quarter, with the proportion of borrowers that have refinanced in the last 12 months increasing significantly

5% 4% 4% 3% 4% 7% 6% 7% 9% 8% 9% 7% 7% 10% 12% 14% 13% 7%

Gap between

intention and

actual



Who is currently winning the switching game?

53Base: Borrowers who have switched lenders within the last year (Mar-19: n=70)

47%

14%

6%

10%

4%

19%

57%

11%

4%

10%

3%

9%

Big 4 Banks

Regionals

Mutuals

Online Banks

Non Banks

Other Banks

Previous lender vs. Current lender

Borrowers who have switched lenders within the last year

Previous lender Current lenderNet change

+10%▲

-3% ▼

-1% ▼

0%

-1%▼

-10%▼

The majority of external switching occurs within the Big 4, however they are still the biggest winners from switching


Intelligence to bank on


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Documents

Australian Mortgage Council...Consumer sentiment 17 The Westpac-Melbourne Institute Consumer Sentiment Index recovered in February after a drop in early 2019 Source: Westpac-Melbourne