The number of people taking out home loans with non-bank lenders is creeping up, a trend the government says shows banking competition is increasing, was stated in an article from Sydney Morning Herald recently.
Federal Treasurer Wayne Swan has promoted non-bank lenders as a “fifth pillar” of the financial system since the big four banks grabbed a dominant market share in the global financial crisis. Amid fierce political and media scrutiny of interest rate changes, the latest figures show a small but growing number of customers are turning to non-bank lenders. Their share of new owner-occupied home loans by value in April was the biggest in more than a year at 8.85 per cent Bureau of Statistics show.
This is still well below the 14 per cent market share the non-banks had before the global financial crisis. But in the year till April small banks expanded their lending twice as quickly as the big banks. Mr Swan said the growth, alongside the non-banks taking a larger slice of the deposit market, showed the governments banking competition changes of late 2010 were working. ”It’s all about putting the power back in the hands of Australian families so that if they don’t like the decision that their bank makes, they can just walk down the road and get a better deal,” he said.
The changes included a ban on exit fees, which came into force in July last year. It is estimated that since then 560,000 mortgages have been written free of exit fees. Despite the small increase in non-bank lenders’ share, the Mortgage and Finance Association of Australia, which represents mortgage brokers, says the ban on exit fees has done little for competition. Group chief executive Phil Naylor dismissed recent rises in non-banks’ market share as insufficient to put more heat on the majors. “It clearly hasn’t made any significant impact on their market share, “Mr Naylor said.
To discuss this topic with John, please contact him on 0749722081 or 0410433919. You can also email him at jwhitten@ihl.net.au or look him up on the net www.ihl.net.au. John Whitten is a credit representative (CRN 399796) of BLASSA Pty Ltd (Australian Credit Licence No 391237).
