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ISCOVER
Staff Reporter
The government’s focus on competition appears to have done little good for the non-bank sector, according to the MFAA.
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MFAA chief executive Phil Naylor said the latest data from the Australian Bureau of Statistics showed the nation’s smaller lenders continue to lose ground on the majors.
Australia’s banks accounted for 90.2 per cent of all housing loans transacted in February – the largest share since last September 2010.
Of that 90 per cent, the majors accounted for approximately 80 per cent.
At the same time, non-bank lenders have experienced their worst market share since they joined the mortgage market in 1995, accounting for just 1.9 per cent of all new housing loans written.
“These figures support our contention that the upcoming elimination of exit fees will not increase competition,” Mr Naylor said.
“Most of the major banks have already dropped their exit fees ahead of government regulation and this has clearly resulted in a churning of loans among the major banks but to the detriment of non-bank lenders.
“On the basis of this trend, non-bank lenders will disappear when exit fees are totally banned in July. How can it be good for consumers when the most competitive lenders are forced out of the market?”
Mr Naylor said the MFAA supported greater competition in Australian home loans. However, the MFAA had asked the government to exempt smaller lenders from the ban on exit fees so they could continue to offer lower rates with a deferred establishment fee – a waiver of establishment fees if the borrower stays in the loan for a minimum period. Deferred establishment fees had been defined as ‘exit fees’ by the government.
“Non-bank lenders are synonymous with bringing down the margin on home loans in Australia, making them more affordable for all Australians,” Mr Naylor said.
“Without deferred establishment fees, competition will reduce and Australians will eventually pay more for their mortgages.”
