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Date Published : Wednesday, May 28, 2008
Calls have been renewed for greater competition within the Australian mortgage market in the long-term interest of borrowers.
Writing in the Australian recently, Lisa Montgomery, consumer advocacy head for the Resi Mortgage Corporation, has insisted that over a period of decades, having more competition results in a lower average mortgage rate on standard variable deals.
Ms Montgomery claims that prime non-bank mortgage lenders across the country have been particularly badly impacted by the fall-out from the credit crunch, due to misinformation and misunderstanding about how the market operates.
She maintains that the non-bank lenders that have entered the market in recent decades have forced the leading banks to lower their interest rates in order to compete and should not be made scapegoats for the current economic problems.
Additionally, the industry expert has suggested that smaller mortgage companies have been behind a string of product innovations in recent years that have been beneficial for consumers and given them more flexible borrowing options.
"It is important to recognise that since deregulation, consumers have benefited more from the introduction of non-bank mortgage providers than they have from the competition between the established bank oligopoly," said Ms Montgomery.
"So while consumers may opt for what they see as a safe haven in the current storm, it is not without a potential future cost."
Meanwhile, GE money recently revealed that it is considering selling off the Wizard Home Loans business it bought for around $500 million in 2004.
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