Banks Grab Huge Slice Of Mortgage Market

Official data recently released has shown that the banking sector has corned its biggest share of the Australian mortgage market since its inception in 1975.

Non bank lenders on the other hand have suffered their worst performance since they entered the mortgage market 16 years ago.

According to Government statistics released last week, non-bank lenders, who sell their loans through mortgage brokers, could only claim one per cent of the home loan market in April.

According to the Australian Bureau of Statistic's records dating back as far as 1975, banks have now cornered 92 per cent of mortgages which is the sector's biggest market share.

Ban on Home Loan Exit Fees Will Hurt Non-Bank Lenders

Due to holding the highest percent of mortgages, brokers have once again appealed to the Federal Government to reverse the ban on home loan exit fees due to come into effect in three weeks time.

The Mortgage & Finance Association of Australia has stated that the ban on 'deferred establishment fees' will really hurt the non-bank sector.

Phil Naylor Chief executive stated that the fees had enabled non-bank lenders to cut their profit margins on home loans, resulting in fierce competition in the market.

According to data recently released by the Australian Bureau of Statistics housing finance, building societies accounted for just 2.2 per cent of the $13.8 billion finance offered by lenders to home buyers in April, and Credit Unions had 4.9 per cent of the market.

Mr. Naylor pointed out that there was clearly no meaningful competition across the industry and that smaller lenders were being squeezed further each month. He further added that the government should either drop the exit fees altogether or exempt non banks from the new regulations.

An advertising campaign has been launched by the Mortgage & Finance Association pleading for the government to reconsider dropping exit fees.

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Published on June 6-th, 2011 in Home Loans
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.
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