Paul Keating has spoken out in concern for the reduced competition in Australian lending markets.
The former Prime Minister points a finger at the Rudd Government for failing to support competition in banking sectors. He also raises concerns over the Big Four and their rise to dominance during the global economic crisis.
Mr Keating says it presents a "systematic risk" for Australian financial economies.
Talking to ABC Radio, Mr Keating suspects that the Rudd Government was in crisis mode during the worst of the financial crisis and could have done more in preserving the level of competition in the banking markets.
"I would never have agreed as Treasurer to allow St George to go into Westpac because you go from six banks or seven banks to four.
"And in the end what they'll do is, working on the basis of never give suckers an even break, they'll simply put the margins up." he said.
During the past two years, the big banks have demolished so much of the competition by being allowed to buy up smaller institutions and reducing second tier lenders.
Westpac bought St George last December, meanwhile the Commonwealth Bank acquired Bankwest in October. Mr Keating does not think the government should have allowed Westpac the Bankwest takeover.
During the financial crisis Commonwealth, Westpac, NAB and ANZ have managed to increase their overall share of the home loan market from 60 per cent to 90 per cent. Keating says this reduced competition will have a major effect on interest rates for borrowers.
The Reserve Bank of Australia is tipped to raise official interest rate as early as November or December and rates are predicted to rise as much as 2 per cent over the coming 12 months. Mortgage rates will no doubt be raised by the banks and home owners who have enjoyed low rates over the past few months will be stung by rising repayments.
If home loan interest rates were to be increased by 2 per cent, the average mortgage would rise to 7.37 per cent. Repayments would increase by considerable levels and on a $300,000 loan the jump would be from $1819 to $2191 a month.
Smaller banks such as Bank of Queensland have also joined the call for more government intervention to help support lending competition.
While the Australian economy, including housing markets and property values, has held up better than in the US or in Britain, reduced competition is a concern for many.
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