Home loan competition is sufficient, say banks
Australia's major banks were due to lodge submissions to a Senate inquiry today (November 30th) in defence of the current level of competition in the home loan market.
Treasurer Wayne Swan recently announced plans to boost competition by helping to turn the non-bank sector into "a fifth pillar" for consumers wanting to compare home loans and switch from one of the four major banks.
However, in a submission to the inquiry by the Mortgage & Finance Association of Australia (MFAA), which has been seen by the Australian newspaper, it is claimed that the small customer share of credit unions and building societies makes such a plan unworkable.
"It is unfortunate that much of the contemporary commentary has revolved around name-calling and vilification, controlling interest rates and an over-attention to regulating exit fees to encourage switching," said the submission.
"It ought to be patently obvious that there is no point in switching lenders if there's no real alternative."
The MFAA stated that as credit unions and building societies hold only a six to seven per cent market share, the non-bank sector "is insufficient to enable consumers to exercise choice".
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