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The MFAA has called for the federal government to lower borrowing costs by undermining the power of the big banks.
The association’s submission to the Senate inquiry into housing affordability argued that competition is being stifled because the big four had held an 80 per cent share of the home loan market since the GFC.
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“Currently, housing finance approvals growth is at historically low levels, despite the normal drivers of demand for finance – interest rates and employment – being at favourable settings,” the submission stated.
“MFAA submits that lack of widespread competition across the housing lending sector is an inhibitor of the development of innovative mortgage products focusing on new buyers.”
The association said it was untrue that the big four compete aggressively with each other because their products and rates are “very similar”.
The big four’s rates are also “appreciably higher” than those offered by many small lenders, it added.
“The problem for the smaller lenders is that they cannot access sufficient funding to establish a critical mass in the market,” the MFAA said, adding that despite government attempts, “nothing over the past five years has made any impact on the big four’s 80 per cent share”.
