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About $1 out of every $3 that banks raised in wholesale money markets during July was unguaranteed, The Australian Financial Review today reported.
Last week Reserve Bank of Australia governor Glenn Stevens urged banks to step up efforts to remove their reliance on the government guarantee, under which for a fee they can issue bonds backed by the Commonwealth AAA credit rating.
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Regional banks continue to rely totally on the guarantee, suggesting it won’t be wound back in the immediate term.
Compounding the woes of regional banks and non-bank mortgage providers is the weak demand for mortgage-backed securities, a key source of funding before the credit crunch but now largely spurned by investors.
Fewer funding options have prevented smaller lenders from expanding their mortgage books.
The Big Four (including Bankwest and St George) now account for 82 per cent of new home loans, compared with 60 per cent before the GFC.
