The MFAA has called for action to ensure competition in the mortgage industry.
In a submission to the Senate Select Committee into Housing Affordability, MFAA CEO Phil Naylor said that competition provided by non-bank lenders was necessary to put downward pressure on interest rates and maintain a range of product options for consumers.
“If non-bank lenders are squeezed out of the market because of lack of access to funds, we will likely see a ‘back to the future’ scenario with banks dominating housing lending and interest rate margins creeping back to pre 1990 levels,” Mr Naylor said.
In order to sustain competition, the MFAA said Australia needs a mechanism to provide access to securitised funds, like those already operating in Canada and the USA – such as Fannie Mae.
Such a mechanism was put forward to the government just last week by Joshua Gans of the Melbourne Business School and Christopher Joye of Rismark.
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