While the Government’s investment in the RMBS market has been welcomed as a first step, the mortgage industry believes that more must follow to ensure sustainable competition.
Mortgage Choice managing director Paul Lahiff said $4 billion could be viewed as a small contribution, given the market was worth around $240 billion every year.
“The investment speaks volumes as a significant step in the right direction – one that is sure to boost confidence,” he said.
As long as the funds were directed to smaller lenders such as credit unions, building societies and non-bank lenders, market competition should ramp up, he said.
FirstMac CEO Kim Cannon also sees the government investment as a positive first move but he warned that further action was needed.
“The government, both federal and state, and other regulatory organisations need to consider further steps to ensure sustainable competition in the mortgage market.
“It is vital that for the sake of competition...these funds make their way past the profit margins of the big banks and foreign owned companies – and to the level where it can make a positive impact for the average consumer,” Mr Cannon said.
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