Moves to up competition in the banking sector
by Peter Switzer
How would you like to get a home loan for around four per cent for 30 years where the rate is fixed? Well, come to where I am at the moment — New York City — because that’s what’s on offer, however, the six month rate for savings deposits is only 1.5 per cent!
The Gillard Government has a chance to show its credentials with the upcoming banking competition reforms. But don’t expect that competition will ever deliver 30-year fixed interest rates, that you don’t even have to pay off if you choose to throw your keys into an envelope and post them back to your lender.
In fact, I met a woman who has done exactly that but it’s not all beer and skittles for her. She is in her sixties and working but she will be lucky to ever borrow again! She is a marked woman.
Non-bank lenders vs. banks
It’s interesting that only recently statistics showed non-bank lenders registered their best growth in mortgages for eight years. This preceded the bank backlash over the post-Cup day extra interest rate rises and the fact that non-banks have money to lend.
We expect Treasurer Wayne Swan to come up with some changes that are expected to help non-banks get access to more funds.
"We're working on measures to make it that little bit easier to walk down the street and get a better deal," he recently told a conference.
Recent figures show non-bank lenders have seen a 12 per cent increase in the number of loans made in October compared to September. Banks only saw a 0.4 per cent rise in loans over the same time.
At the moment, many borrowers are standing on the sidelines with first homebuyers only numbering 15.4 per cent, which is a low level not seen since 2004.
It has been said that a hung parliament won’t bring much reform of any substance, but this could be the Gillard Government’s first test on a subject that many Australians really care about.
If the measures announced by Mr Swan are half-hearted and of minimal consequence, the Government will cop a bashing in the media.
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Published on: Thursday, December 09, 2010blog comments powered by Disqus