Significant mortgage market share changes have occurred during the financial crisis in Australia, with the traditional Big Four banks becoming the Big Two.

In August 2008, Westpac became the biggest mortgage lender in Australia when the Australian Consumer & Competition Commission (ACCC) did not oppose its takeover of St. George, which at the time ranked fifth in outstanding mortgages.

Not to be outdone, the Commonwealth Bank purchased the financially distressed Bankwest later in that year, which the ACCC again did ‘not oppose’, with the combined market share returning Commonwealth Bank back to top mortgage dog.

Fast forward to September 2009, and Commonwealth Bank / Bankwest holds $270 billion in mortgages, or 25.5% market share, with Westpac / St George $248 billion, or 23.4% market share, as both banks have been aggressive in retail customer acquisition.

Australia’s Big Two hold $517 billion in residential lending, or 48.9% of the total $1,057 billion total of all banks and non-banks, at September 2009.

Of most interest though is the Big Two continue to gain market share, when compared to the 48.3% in June 2009, 46.4% in March and the 44.9% for December 2008.

If this rate of mortgage market share acquisition continues, then the Commonwealth Bank and Westpac will hold more than 50% of mortgages by Christmas 2009.

The ACCC either underestimated the customer acquisition pull of these two banking goliaths, or overestimated the strength of the competition.

This leaves some head scratching about how the competition watch dog allowed two banks to control 50% mortgage market share, and four banks 75% market share, when the Australian public demand answers about the lack of competition options.

Mortgage market share analysis sourced from the CoreData-brandmanagement November edition of the Australian Mortgage Report.