Westpac and St. George merger set to hurt home owners

The proposed acquisition of St. George by Westpac will adversely affect home
owners, according to Rate Detective's (www.ratedetective.com.au) Director David Kaplan.

"The home loan market is currently on a knife's edge with only a few lenders
prepared to offer consumers competitive packages," explains Mr. Kaplan.

"Experience has showed us that these [competitive] lenders tend to be second tier
institutions, such as Bank West, St. George, ING and RAMS." Mr. Kaplan
continues, "any further reduction of competition in this end of the market may lead to
disintegration of the competitive constraints that are currently holding the market

At the time of writing, a normal size home loan of $300,000 attracts an average
standard variable rate of 8.77% from the big four banks. This is in contrast to the
average rate of 8.65% currently offered by the second tier lenders (Bank West, St.
George, ING and RAMS).

"At Rate Detective we have seen higher demand than ever before coming from home
owners looking to refinance existing loans as a result of rising interest rates." Always
committed to finding the best products for consumers, Mr. Kaplan concedes that
"the answer inevitably lies outside the big four banks and with St. George out of the
market, our choice set of realistic options is down to two or three credible lenders."

According to Mr. Kaplan, "it will therefore become increasingly harder to satisfy
demand for refinances and new loans within a diminished second tier market."

Recent ABS statistics confirm suspicions that there has been a significant increase in
refinances in recent months. January through February 2008 witnessed refinances
increase 8% and the February 2008 figure is sitting 9.2% above the same time last

The proposed acquisition is still subject to regulatory approval. Whilst the ACCC
have not publicity announced their timeline for analysing the merger, a likely decision
date will not be until September based on previous mergers of this magnitude.

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Published on May 5-th, 2008 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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