But Perham highlighted some interesting trends. Since 2019, he said, Macquarie had frequently had a market share of more than 10 per cent of new mortgages with low loan to valuation ratios. This reflects the Sydney-based bank’s decision not to focus on home loans with LVRs of more than 85 per cent.
What’s more, he said, when it came to broker-originated home loans, there had been sustained periods where Macquarie has written 15 to 20 per cent of low LVR loans.
Macquarie’s credit policies mean that in the nine months to December 2023, 30 per cent of Macquarie’s home loan settlements had an LVR of 60 per cent or less; 23 per cent had an LVR of between 60 per cent and 70 per cent; and a further 45 per cent had an LVR of between 70 per cent to 80 per cent. Only 2 per cent of settlements had an LVR of between 80 per cent and 90 per cent.
No cash backs
Even more ominously, Perham said Macquarie had been able to lift market share despite not matching its major competitors in offering home loan cash backs.
Cash backs, he said, had been a “headwind” for the bank. In June, when all the major banks were still offering cash backs, he said, “our market share of broker applications was 10 per cent – I’m talking across all LVR bands.”
But in July, the first month when some competitors stopped doing cash backs, “that increased to 17 per cent”.
It was then that Perham struck fear into his competitors, saying: “When we think about our future potential, we think those data points are instructive because they illustrate just how strongly our brand and our digital proposition is resonating with customers and what our fulfilment engine is capable of.”
Disciplined on pricing
All the same, he said, Macquarie would remain disciplined on home loan pricing.
“It is a very competitive market and there will be periods of time when we think returns are below the level that shareholders expect. And so you should expect to see our market share and our growth fluctuate over time,” he said.
For instance, Macquarie’s share of new home loan applications dropped in December and January after the bank lifted home loan rates to reflect its higher funding costs.
“That led to a steep fall in our market share of home loans because we seemed to be targeting a higher (return on equity) than some of our competitors,” Perham said.
Rival bankers will also be disconcerted to see that Macquarie has been able to maintain quick loan turnaround times even though home loan volumes have jumped.
We’ve had the best in market approval times for many years.
— Ben Perham, Macquarie personal banking
“We’ve had the best in market approval times for many years now and that was a key factor in winning the confidence of the broker channel in the early years of our success,” Perham said.
And Macquarie has maintained consistent turnaround times “despite a four-fold increase in volumes”. “And that speaks to our deliberate investment in technology and processes that are scalable,” Perham said.
He also signalled Macquarie was looking beyond the broker channels, and that it had ambitions to grow its direct market share from around 1 per cent at present.
He said: “We do see direct as a future growth opportunity as more customers come to see the value of our superior digital offering relative to branch banking and as we continue to build Macquarie’s brand to be as iconic in retail as it already is in the corporate space.”
Perham also predicted Macquarie’s cost ratios for broker-originated loans would continue to fall.
“We already have a very competitive cost structure there, with a (cost-to-income ratio) in the 30s. We think we can improve on that and have an even more competitive cost structure as we continue to take market share and increase scale,” he said.
At the same time, Perham said, Macquarie’s strategy of focusing on higher quality home loans meant it had “the best credit quality book in the country”.
As at December, only 0.3 per cent of home loans were more than 90 days or more behind in interest and principal repayments “which we think compares extremely favourably to the market”.