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One housing group has warned the federal government about a lack of competition in the mortgage lending and insurance industries.
The Housing Industry Association said a lack of competition was affecting house prices and building activity in its submission to the Competition Policy Review.
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The big four banks and the LMI insurers need to offer consumers more options with “pricing, contestability and product range”, according to the association.
“The imperfect competitive conditions in the mortgage finance market were demonstrated by the fact that mortgage lenders failed to fully pass on the 225-basis point reduction in the RBA’s official cash rate since November 2011,” it said.
“With only one major provider of LMI in Australia, the competitive shortfall is substantial. The LMI premiums are substantial relative to the size of mortgage loans.”
The association’s submission also called for governments to create long-term strategies for land supply.
“Many state governments have introduced policies designed to curb urban sprawl which has seen an increase in medium-density dwellings and apartments,” it said.
“But adequate long-term land supplies for infill and greenfield housing should be an essential element of every state government policy.”
[Related: HIA says sales may have peaked]
