The Australian Home Loan Market – Survey analysis | KPMG | AU
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The Australian Home Loan Market – Survey analysis

The Australian Home Loan Market – Survey analysis

What do Australians in the market for a home loan really want? To answer this question, KPMG conducted a survey of ‘mass affluents’ to understand their customer experiences and preferences during their home loan journey and how they vary by demographics such as age, gender, and relationship status.


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Illustration of apartments and houses along a suburban street

Winning the fight for customers

Since 2006 the median house price in Australian capital cities (where 67 percent of the population live) has more than doubled from $286,000 to almost $700,000. A similar story is true for units and apartments where median prices across capital cities has grown by 40 percent in the last ten years. Over the same period, Australian wages have grown at a much more modest compound annual rate of 3 percent. However, in spite of this climate, the great Australian dream of home ownership persists.

KPMG’s mortgage market survey, The Australian Home Loan Market – Winning the fight for customers, has found that for the majority of ‘mass affluents’ taking out a home loan is in their sights in the next two years.

More than 600 KPMG professionals earning between $70,000 and $250,000 per annum – falling into the ‘mass affluent’ definition – were surveyed about their views of the mortgage market and their future intentions.

Survey key findings

  • Continued demand exists for home loans despite rapidly rising residential prices: 63 percent of mass affluents currently without a home loan plan to apply and buy within the next two years
  • Don’t close branches just yet: 45 percent of respondents still want to apply for a home loan at a branch
  • Digital reigns supreme for research and servicing home loans: 87 percent of respondents indicated that digital channels are their preferred choice for researching and servicing their home loan
  • The increasingly important role of brokers in origination: 44 percent of mass affluents prefer to use a broker when applying for a home loan
  • Price isn’t everything for some customers: Only 9 percent of respondents who took out a loan with their existing bank did so because they believed they were getting ‘the best deal’
  • Loyalty to a single bank is rare: 66 percent of respondents preferred to bank with more than one financial institution.

Strategies to assist financial institutions 'win the fight for customers'

Competition amongst Australian banks in home lending is particularly fierce at the moment. To maintain market share, banks are heavily discounting their front books. To abate this race to the bottom in home loan profitability, banks are increasingly trying to differentiate their value propositions on service, not just on price.

Across our banking clients we are seeing substantial sums of money being spent on improving the home loan experience of customers. We estimate that Australian financial institutions will spend over $250m in each of the next 2 years. But what do Australians in the market for a home loan really want?

Findings from the survey pose a number of key challenges that Australian financial institutions must address in order to win the fight for home loan customers. These include:

  1. Recognising difference – important differences exist for mass affluent customers at the sub-segment level and these differences need to be factored into efforts to improve the end to end customer experience. To successfully differentiate themselves and bridge the current gap between expected and actual home loan experiences, Australian financial institutions need to take a big data, analytically driven approach to redesigning their home loan customer journeys and use the insights from this analysis as an input into human centred, zero-based design efforts.
  2. Understanding channel diversity – the use of brokers for acquiring home loan customers is on the ascent and is clearly a popular choice amongst our mass affluent survey respondents. But what is the long-term equilibrium for the broker channel? How will this affect home-loan pricing and retention strategies? What implications does it pose for the changing size and capabilities required in the branch networks of the major banks and credit unions? Australian financial institutions need to develop clearly defined strategies for optimising the value of broker partnerships and balance these plans with its proprietary channel strategies.
  3. Striving for clarity – respondents clearly stated that integrity and simplicity are extremely important factors in the decision making process around which institution to deal with when it comes to the most important investment they are likely to make in their lifetime. However, the survey also shows that most financial institutions are failing to consistently deliver against these expectations.
  4. Considering cultural improvements – Cultural change lies at the heart of transforming customers’ home loan experiences and earning their trust. Leading institutions are experimenting with cutting edge technologies that draw on multi-channel, psychographic data to optimally match customers with the home loan specialist best suited to their personality and needs.

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