By BN | 01 Nov 2010
The latest statistics from the Australian Prudential Regulatory Authority reveal that the top four banks control more than 80% of the housing loan market.
Westpac, CBA, ANZ and NAB collectively own 83.3% of all owner-occupied housing loans in September – up 0.3% from August.
According to Senator Nick Xenophon, the high concentration reaffirms the importance of a Senate inquiry into the banking system. “The higher the concentration of the big four banks, the higher the fees and charges and more pressure on the consumers,” Xenophon said.
Home loans held by the major banks totalled $563.5bn – the total loan market is $700bn.
However, Smartline personal mortgage adviser Kevin Lee said lending institutions generally classified as non-majors - the likes of ING Direct, CUA, AMP, Citibank, Suncorp, Heritage and Adelaide Bank - are indeed making a comeback into the market, despite the figures.
"Pre-GFC my clients were able to access competitive loan products from around 40% of lenders that were not one of the Big Four banks," he said. "Unfortunately a major effect of the GFC meant that many of these alternate lenders could not get access to a reliable and consistent supply of new money from the wholesale markets."
However, Lee said "we could be currently seeing a return of competitors" without the need for government intervention. "For the second month in a row Smartline advisers across Australia have submitted approximately 30% of our loan applications to our 'non-major' lenders," he said. This compared with a proportion that varied between 5% - 10% during the GFC.
"Competition is back and I think the majors know it. Suddenly they're willing to negotiate interest rate discounts again. It's been a while since CBA and Westpac took that initiative," Lee said.
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