by clicking the arrows at the side of the page, or by using the toolbar.
by clicking anywhere on the page.
by dragging the page around when zoomed in.
by clicking anywhere on the page when zoomed in.
web sites or send emails by clicking on hyperlinks.
Email this page to a friend
Search this issue
Index - jump to page or section
Archive - view past issues
MFAA Prosper : Mortgage and Finance Brief 06
Words Ben Power Australia’s Senate has launched a wide- ranging inquiry into Australia’s banking industry that could increase pressure on the Federal Government to curb the power of the Big Four banks. The Government backed calls from the Opposition and Independent Senator for South Australia, Nick Xenophon, for a banking inquiry amid growing public concern about lack of competition in the home mortgage market. It comes as the Commonwealth Bank and ANZ hit borrowers with rate increases above the Reserve Bank hikes. The inquiry will examine issues including competition between banks and non-bank lenders, product availability, fees and charges, and contract terms. It will also look at the ease of switching between banks and the obstacles to the creation of new lenders and lending products. A spokesman for Xenophon said the Senator will focus his efforts on the costs of borrowing and the availability of home loans and small business borrowing. He will also press banks on customer mobility, including home loan exit fees. The MFAA will put in a submission which argues that the cause of Australia’s home lending market problems is a lack of competition after the global financial crisis. “ You’re not going to change consumer concerns about what’s going on with interest rates and fees, etc, until you get more effective competition, with more lenders in the market giving more choice to consumers,” says MFAA Chief Executive Phil Naylor. Naylor says the MFAA’s submission will urge the adoption of a Canadian model, based on the Canadian National Housing Act Mortgage-backed Securities, which would see the Federal Government back a business that produces mortgage- backed securities designed specifically for small lenders. During the GFC the Canadian model generated significantly more mortgage funding than in Australia. “A lot of non-banks struggled because they didn’t have funding,” Naylor said. “Under the model I’m talking about they will have funding. Brokers are only too willing to look at the products offered by non-bank lenders as long as they’re in the market and have got funding.” Grant Rheuben, a mortgage broker at LoanMarket, says mortgage brokers need to promote non-bank products to cut the level of home lending by the major banks from over 90 per cent to around 70 per cent. “ We as brokers need to promote the non-bank product and get that percentage down,” he said, adding that otherwise the big banks “will be able to dictate terms and conditions for the broker market”. But Rheuben says that after the GFC many customers have stuck with well- known brands: “There’s enough choice out there from non-bank lenders to still provide a competitive product. Where it falls down is the consumer doesn’t understand the brand name of that non-bank. They stick to the Big Four.” Pressure increases to curb power of Big Four Major banks announce record profits Australia's major banks posted record profits of $28.5bn for 2009-2010, according to KPMG's Major Australian Banks Year End 2010 survey. The profits are 26% up on 2008-2009, and buck the trend globally, where economies and banks continue to struggle. Customers set to refinance An increasing number of borrowers are looking to refinance in the wake of cash rate moves by major banks. Home loan comparison site www. helpmechoose.com.au reports home loan comparison requests increased by 335% in the week after the rate rises were announced. First homes bought under 30 Most Australians are buying their first home before they reach 30, a survey by Club Financial Services has found. 77% of first home buyers were under the age of 30. House price growth slows Figures from the Australian Bureau of Statistics shows that house price growth slowed in the third quarter, rising 0.1% after a 2% rise in the quarter to June. The growth is a marked contrast to the final quarter of 2009, when prices rose 5.5%. Brisbane was the worst performer in the third quarter figures, with median prices falling 2.1%. Phil Naylor, MFAA Chief Executive 8 | Mor tgage & Finance brief News
Mortgage and Finance Brief 05
Mortgage and Finance Brief 07