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Jessica Darnbrough
While brokers largely support the entry of foreign banks into the Australian mortgage market, one key industry stakeholder believes these banks would fail to inject much needed competition into the mortgage market.
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Speaking to The Adviser, RESI's Lisa Montgomery said the cost of funds in the capital markets would prevent foreign banks from being competitive in the Australian mortgage market.
"I think there has been a lot of discussion about international banks coming to our shore and providing money to the market. I don't think they would have too much of an impact on competition, because the cost of funds in the capital markets isn't going to change in the short term," Ms Montgomery said.
"If there is an opportunity for offshore banks to bring cheaper funds to our market, they would have to do it through existing channels, channels that already have distribution and a brand in the marketplace and I don't expect this to happen."
Ms Montgomery's comments come just one week after Yellow Brick Road's Mark Bouris claimed Japanese banks were eyeing the Australian mortgage market.
According to Mr Bouris, the high margins Australia's banks currently make on mortgages could encourage Japanese banks to push into the Australian market – a move that would be widely supported by brokers.
According to a recent The Adviser straw poll, 63.7 per cent of brokers would like to see more foreign banks lending in Australia.
Of the 1156 respondents, 18.7 per cent said they would not want to see more lenders entering the market.
