Powered by MOMENTUM MEDIA
subscribe to our newsletter

Regional banks mount attack on majors

A group of regional banks has challenged the majors’ stranglehold on the mortgage market through a submission to the Financial System Inquiry

The submission – a collective effort by Suncorp Bank, ME Bank, Bank of Queensland (BOQ) and Bendigo and Adelaide Bank – notes that Basel II may have contributed to the re-direction of bank capital into the higher return/lower risk retail banking market for home lending and away from business lending.

According to a BOQ spokesperson, the submission makes recommendations that could narrow the competitive gap the majors currently enjoy, injecting greater competition into the Australian mortgage market.

“We believe that levelling the playing field would benefit consumers by introducing more competition into the housing lending market and support the small business sector through reallocation of capital,” the submission stated.

The BOQ spokesperson also told MortgageBusiness that the Australian banking system’s current bias towards housing lending – which has increased since the global financial crisis as a result of regulatory anomalies that provide significant funding and capital advantages to the major banks – risks misallocation of resources, which has ramifications for the overall health of the banking system.

Advertisement
Advertisement

“Our submission to the Financial System Inquiry notes that regional banks have increased their share of lending to the business sector since the GFC while the majors have decreased their share of lending,” a BOQ spokesperson said.

The regional banks’ submission points out that the rest of the banking sector competes hard for housing lending despite the regulatory anomalies that provide the major banks with significant funding and capital advantages.

It also warns that a banking system bias in housing lending may increase systemic risk to the Australian financial system as bank lending fuels rapid asset price increases.

“We have made recommendations that we believe would result in a more balanced allocation of capital and this would support Australia’s economic growth over the longer term,” the spokesperson said.

 

PROMOTED CONTENT


Regional banks mount attack on majors
mortgagebusiness

Latest News

True Savings, a new online brokerage headed by former CBA executive Pete Steel, has entered the Australian mortgage market. ...

Pre-registrations have opened for Citi’s upcoming buy now, pay later offering, Spot., which will launch in October. ...

New Zealand’s central bank is primed to further tighten mortgage lending standards, following concerns with a rise in high-LVR and high-DT...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.