Mortgage broking market needs an even playing field
The clear lack of competition in the mortgage broking space has been highlighted once again by the Commonwealth Bank increasing its stake in Aussie Home Loans to 80 per cent ownership, according to Vow Financial chief executive Tim Brown.
The four major banks are running around 92 per cent of the writing volume for the broking market, and aggregators are generally one of the few groups that are still pushing international, regional and non-bank mortgage options, Brown said.
"Now if the major banks start to own the aggregators, they're going to start to squeeze that last 8 per cent out - so for me it's devastating," he said.
One of the most significant outcomes of the parliamentary inquiry into competition and choice in the banking and non-banking sectors was the recognition of the need for more competition in the mortgage broking market, Brown said.
Given it is an election year, what the Government does with this knowledge will be important to all consumers, he said.
"It's hard to get people excited about how uncompetitive the market is because interest rates are on the way down, but if interest rates were on the way up it would be a very different story," he said.
Brown said that with the exemption of ING, Citibank, Macquarie and state banks like Suncorp and Bendigo Bank, there was little competition out there, and what there was lacked the same funding as the major banks.
"When rates go up, the majors will be passing it on the next day - they won't be waiting six to eight weeks. If there was real competition in the market these things wouldn't happen."
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