Greater lender competition is essential to ensure borrowers get a fair deal, according to Mortgage Choice CEO Michael Russell.
Speaking at a media luncheon yesterday, Mr Russell warned of the dangers of the market reverting to the lending landscape of the seventies and eighties, and called on the government to provide further support to smaller lenders.
“Greater competition with the majors would encourage lower rates and fees as well as a broader range of loan features,” Mr Russell said.
“Healthy competition encourages lenders to stay on their toes in terms of quality and price of loan products, which is of vital importance to the health of the market and the health of consumer choice.”
Mortgage Choice recently beefed up its lending panel with the additions of non-bank lenders Homeloans Ltd and Liberty Financial.
The move was in response to banks’ crippling turnaround times while opening up new channels of funding.
“Adding Homeloans Ltd to our panel has been a big success – it has given our members a valuable alternative.
“The recent addition of Liberty Financial has also give us an opportunity to strengthen our diversification offering through access to motor and equipment finance as well as a range of near prime products.”
Data released by Mortgage Choice shows that while the lion’s share of its business is still written by the majors there is a clear swing emerging back towards second-tier and non-bank lenders.
Volumes to the big four have fallen from a peak of 75 per cent in the first quarter of 2009 to a forecast 57 per cent in the first quarter of 2010.
Non-banks have recovered from a low of 1 per cent to 4 per cent over the same time frame.
Over the last year banks outside the big four have recovered from a 21 per cent share to an estimated 34 per cent share in the first quarter of 2010.
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