Unfixed: Cash rate cuts have caused revenue to decline, despite growing mortgage portfolios

The Mortgages industry's revenue has declined over the past five years due to consistent cash rate cuts over the period. While a lower cash rate can benefit the industry through greater demand for mortgages and housing price growth, declining interest income for lenders more than offsets any positive effects. Industry revenue is expected to decline at an annualised 1.5% over the five years through 2017-18, to $79.9 billion. This includes an anticipated decline of 0.7% in 2017-18. The RBA left the cash rate unchanged between August 2013 and February 2015, and from May 2015 to May 2016, providing a slight boost to industry revenue...read more.

Industry Statistics & Market Size
Revenue
$80bn
Annual Growth 13-18
-1.5%
Forecast Growth 18-23
x.x%lock
Profit
x.x%lock
Employment
163,132
Businesses
143
Market Share of Companies

Industry Threats & Opportunities

  • The big four banks account for over 80% of the Mortgages industry's revenue
  • Industry assets have grown consistently due to a strong rise in residential housing prices
  • Interest rates are forecast to increase as the economy strengthens, boosting industry revenue

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    Industry Report - Industry Locations Chapter

    The Mortgages industry in Australia is spread out largely in line with the population distribution. Authorised deposit-taking institutions have reduced the size of the branch networks over the past five years. Movements in branch and establishment are largely driven by the big four banks. The number of branches in the big four banks' networks has fallen over the period as they transition towards digital banking platforms. The eastern states of New South Wales, Victoria and Queensland account for over three quarters of the total number of branches, with the majority located in the capital cities of these states. These cities and states are typically more densely populated, with Sydney and Melbourne being the financial hubs of Australia...purchase to read more.

    Additional Insights for the Mortgages Industry

    IBISWorld identifies 250 Key Success Factors for a business.The most important for the Mortgages Industry are

  • Economies of scale
  • Superior financial management and debt management
  • Management of a high quality asset portfolio

    • IBISWorld analysts also discuss how external factors such as Residential housing loan rates and Mortgage affordability in the Mortgages industry impact industry performance..

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    What's in this report

    Industry Products

    What is the Mortgages Industry?

    The Mortgages industry comprises the mortgage lending activities of authorised deposit-taking institutions (ADIs). ADIs include banks, building societies and credit unions. Industry revenue is generated through interest repayments and fees charged on mortgages. The industry does not include mortgage brokers.

    Industry Products
  • Standard variable loans
  • Basic variable loans
  • Fixed-rate loans
  • Line of credit
  • Other loans
    • Industry Activities
  • Mortgage origination
  • Mortgage refinancing
    • Table of Contents

    About this Industry

    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources

    Industry at a Glance

    Industry Statistics Snapshot
    Industry Structure
    Executive Summary

    Industry Performance

    Executive Summary
    Key External Drivers
  • Residential housing loan rates
  • Mortgage affordability
  • Ratio of interest payments to disposable income
  • Residential property yields

    • Current Performance
  • Residential property market
  • Rising competition
  • Capital requirements
  • Out-of-cycle

    rate hikes

  • Chart: Revenue Growth

    • Industry Outlook
  • Stronger growth
  • First-home buyers versus investors
  • APRA and

    monetary policy

  • Table: Mortgages Industry Revenue Outlook

    • Industry Life Cycle
  • Life cycle reasons
  • Chart: Benchmarking - Mortgages Industry Lifecycle vs The Economy

    • Products & Markets

    Supply Chains
    Key Buying Industries
  • Residential Property Operators
  • Consumers

    • Key Selling Industries
  • Consumers
  • Financial and Insurance Services
  • Mortgage Brokers

    • Products & Services
  • Standard variable loans
  • Fixed-rate loans
  • Basic variable loans
  • Other loans
  • Line of credit
  • Chart: Mortgages Industry Products and Services Segmentation

    • Demand Determinants
    Major Markets
  • Residential owner-occupiers
  • Residential investors
  • Commercial investors
  • Chart: Major Market Segmentation for the Mortgages Industry

    • International Trade
    Business Locations
    Chart: Business Locations by State

    Competitive Landscape

    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
  • Chart: Cost Structure Benchmarking – Sector vs Mortgages

    • Basis of Competition
    Barriers to Entry
  • Table: Barrier to Entry Checklist for the Mortgages Industry

    • Industry Globalization

    Major Companies

    Commonwealth Bank of Australia, Westpac Banking Corporation, Australia and New Zealand Banking Group Limited, National Australia Bank Limited,
  • Table: Commonwealth Bank of Australia - financial performance
  • Table: Westpac Banking Corporation - financial performance
  • Table: Australia and New Zealand Banking Group Limited - financial performance
  • Table: National Australia Bank Limited - financial performance

    • Operating Conditions

    Capital Intensity
  • Chart: Level of Capital Intensity for the Mortgages Industry
  • Chart: Tools of the Trade: Growth Strategies for Success

    • Technology & Systems
    Revenue Volatility
  • Chart: Volatility vs Industry Growth

    • Regulation & Policy
    Industry Assistance

    Key Statistics

    Table: Industry Data for the Mortgages Industry
    Includes:
  • Industry Revenue (2009-2023)
  • Industry Gross Product (2009-2023)
  • Establishments (2009-2023)
  • Businesses (2009-2023)
  • Employment (2009-2023)
  • Wages (2009-2023)
  • Total Assets (2009-2023)

    • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data

    Jargon & Glossary

    Cash Rate
  • The rate at which banks lend funds to one another overnight. It is set by the Reserve Bank of Australia.
    • Four Pillars Policy
  • A legislative policy of the Federal Government that ensures the four major banks operate separately by prohibiting any mergers and acquisitions among them.
    • Securitisation
  • Involves the purchase of assets by a special purpose vehicle, which uses the asset's cash flows to service interest payments on asset-backed securities that have been sold to investors.
    • Tier 1 Capital
  • A means by which regulators measure the financial strength of a bank through assessing the structure of their capital.
    • What Our Customers Say
    Why buy this report?

    The Mortgages market research report provides key industry analysis and industry statistics, measures market size, analyzes current and future industry trends and shows market share for the industry’s largest companies. IBISWorld publishes the largest collection of industry reports so you can see an industry’s supply chain, economic drivers and key buyers and markets.

    IBISWorld industry market research reports enable you to:
    • Find out about key industry trends
    • Identify threats and opportunities
    • Inform your decisions for marketing, strategy and planning
    • Quickly build competitive intelligence
    This report on Mortgages:
    • Provides Market Size information to assist with planning and strategic decisions.
    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
    • Helps you understand market dynamics to give you a deeper understanding of industry competition and the supply chain.
    • Analyses key performance and operational metrics so that you can benchmark against your own business, that of your customers’ businesses, or your competitors’ businesses.
    The Mortgages market research report includes:
    • Historical data and analysis for the key drivers of this industry
    • A five-year forecast of the market and noted trends
    • Detailed research and segmentation for the main products and markets
    • An assessment of the competitive landscape and market shares for major companies
    • And of course, much more

    IBISWorld reports on thousands of industries around the world. Our clients rely on our information and data to stay up-to-date on industry trends across all industries. With this IBISWorld Industry Research Report on Mortgages, you can expect thoroughly researched, reliable and current information that will help you to make faster, better business decisions.

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