Australia’s banks are now more dominant than ever before, the MFAA has claimed.
Mortgage lending figures for May 2011, compiled by the Australian Bureau of Statistics, show that Australian banks accounted for 92.5 per cent of housing finance, the highest market share figures ever recorded.
Mutuals (credit unions 4.3 per cent and building societies 2.0 per cent) had 6.3 per cent and non-bank lenders wrote 1.2 per cent of mortgages in May.
Twenty years ago the mutuals had 10.2 per cent of the market and in 2003 the non bank market share peaked at 15.2 per cent.
The dominant market share of the banks comes with a price tag, with the standard variable rate average over the four major banks being 7.79 per cent in May, which is generally subject to discounting.
The banks out-paced the credit unions on an average of 7.32 per cent and the non-banks with an average SVR of 7.01 per cent in May.
MFAA chief executive Phil Naylor said the lending figures suggested the government needed to do more to facilitate competition in the $1.2 trillion mortgage lending sector.
“This is an important part of the Australian economy and it is dominated by one type of lender,” said Mr Naylor.
“The figures tell us that the non-bank lenders are the most competitive when it comes to interest rates, yet they are being squeezed out of the market.”
But while the figures are obviously very damning to the non-bank sector, they cannot be taken purely on face value.
The stats that the ABS issue are not counted at the mortgage manager level but are counted at the "wholesale funder" level.
Some of the wholesale funders are banks or divisions of banks, as such, their lending figures actually end up being counted in the ABS’ bank lending figures.
In addition, some of Australia's traditional non-bank lenders have been partially or fully bought by banks in recent years. As such, their lending figures also make up the bank lending statistics reported by the ABS.