Failed Efforts to Increase Mortgage Industry Competition
A major report produced by UBS recently showed that the attempts of the Labor Government to increase competition within the $1.3 trillion mortgage market in Australia have been unsuccessful. The analysis conducted by the investment bank showed that few homeowners are taking the opportunity to switch between the major banks.
The report clearly indicated that investors are driving the property market. According to UBS, in the past two years the annual external refinancing rate fell to the low level of only 2% across the banks.
This report showed that the banning of exit fees to encourage more customers to leave their current financial provider in search of a better deal has had little impact on the financial institutions.
In light of these findings, the Customers Owned Banking Association – representing credit unions and building societies – has identified a “pressing need for a wide review of our banking system.”
The UBS report revealed that the country’s biggest bank – the Commonwealth Bank – funded approximately $34billion of mortgages over the past 6 months, as a result of its active targeting of the investment market and increased use of brokers. Westpac, ANZ and the National Australia Bank each funded approximately $22bn of mortgages.