 Big players in the mortgage market
Australia may have a strong and robust banking system, which has so far avoided any major impacts from the global economic crisis, but what does this mean for competition and our future?
In the US and in Britain housing markets and banks struggled through the worst of the GFC while we seemed to sail through relatively unharmed.
Commonwealth, Westpac, NAB and ANZ are the Big Four players in the banking markets and mortgage markets. A big source of competition in Australia's retail banking over the decade was the entry of new players, including foreign banks and mortgage securitisers and brokers, as well as regional banks. But since the financial crisis many of these new players have had difficulty getting funds.
With smaller lenders and foreign banks reducing their lending and tightening criteria, along with many being bought out by the big local banks, competition is under threat.
Christopher Joye, who once worked as economist for the RBA, recently carried out research within the housing and property market for Rismark and is not quiet about his calls for government intervention.
He points to Canada's example of providing guarantees for many new competitors in the market.
The RBA has been optimistic about competition coming back to the lending market once the global economy and the local markets have stabilised. Industry voices are backing the general public's concern over the Big Four having such a large competitive advantage in the home loan market. Last week, even the Reserve Bank of Australia expressed concerns over the dominance of the larger banks. Home values here in Australia have avoided major falls and there are still affordable home loans available in the market. But the concerns over reduced competition is not going away and there are calls of the government to act now to support the lending market. What do you think will keep competition in the financial and home loan market? Tell us on our forum.
Join the discussion on Everything else about home loans
|