8 Jul 2013

ASB aggression pays off in market share gain

8:00 am on 8 July 2013

The ASB bank's new-found aggression in the mortgage market is paying off in market share gains, even as its growth comes from the riskiest part of the market.

ASB, which is owned by the Commonwealth Bank of Australia, now has just over 22% of the market.

Until late last year, it had consistently lost market share since the September quarter of 2008, when its had nearly 25%.

Nearly threequarters of its net new mortgage lending in the March quarter was to people with deposits of less than 20% of their home's value.

Massey University head of banking studies David Tripe says this may simply reflect ASB's strength in the high-priced Auckland market - but it could also be because its growth in the past three to four years has been relatively slow and it has decided to be more aggressive.

Dr Tripe says it's difficult to draw conclusions on the basis of one quarter's data.

He also says that because of uncertainty about the Reserve Bank's next move on loan-to-value ratios, there is some argument for banks to lend all they can now because they might not be able to lend in the same way in the future.

The Reserve Bank is planning to start restricting mortgage lending to people with skinny deposits.