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The federal government is considering new initiatives to support second-tier banks and non-bank lenders in a bid to bolster mortgage market competition.
Among the initiatives currently under consideration by treasury officials is the prospect of widening the current $8 billion AOFM RMBS investment to $30 billion, The Australian Financial Review reported today.
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A government guarantee for mortgage securities with a AAA rating is also being considered.
The news comes as the existing AOFM program, launched to support competition last year, is due to come to a close.
While the program has provided a substantial funding boost to non-bank and regional banking players, the major banks’ stronghold over the market remains firm.
According to research released by CoreData in May, the major banks, including St George and Bankwest, now owner by Westpac and CBA, accounted for over 70 per cent of all mortgage lending in the March quarter.
