AFG today said the ACCC’s Residential Mortgage Price Inquiry report has provided damning evidence of the major banks “synchronising” interest rate increases, underlining the importance of ensuring a competitive home loan market.
AFG chief executive officer David Bailey applauded the ACCC’s conclusion that consumer choice and lower interest rates on offer from smaller lenders competing with the major banks would be threatened by any regulatory measures that affect the role of mortgage brokers.
“The ACCC has highlighted how important the role of mortgage brokers is in creating a market where consumers are offered the widest choice of lenders at the lowest prices,” Mr Bailey said.
“If Australia’s competition watchdog has concluded that the pricing of mortgages in Australia is opaque, how are consumers expected to navigate the variety of home loans without the assistance of their local mortgage broker?”
The ACCC report found the four major banks dominate the Australian lending market, underscoring why a viable mortgage broking market is crucial for retaining competitive pressure.
AFG pointed to the ACCC’s finding that lenders offering the best deals for consumers by competing on price rely heavily on mortgage brokers to gain market share. The ACCC warned that these lenders, responsible for the competition in the home loan market, “are likely to be more vulnerable to future regulatory changes that affect the use of brokers as a distribution channel.”
Mr Bailey said the ACCC’s report would be considered by policymakers in preparation for the regulatory response to the Royal Commission into Banking and Financial Services. The ACCC report means the nation’s competition authority has joined Treasury and the Productivity Commission in demonstrating the benefits to consumers of a competitive home loan market.
“In a world where we have the ACCC declaring that Australia’s home loan market is lacking competition, price leadership is effectively as damaging as actual collusion.
“This is why mortgage brokers are so important. It would be unfathomable for policymakers to consider taking steps which would limit competition by impacting the very channel that has been increasingly embraced by consumers for the competition and choice the channel delivers,” Mr Bailey said.