Banks sit down for roundtable
(17 December 2009 – Australia) Small lenders will remain hampered by funding costs in 2010 allowing the big four to continue their domination of the home lending market, according to the results of a roundtable discussion attended by the majors.
A round table and survey, conducted by financial consultancy firm Deloitte, of 10 major players in the Australian home lending market showed that nine of them thought the major banks would continue to write more than 80 percent of new home loans in 2010.
Axel Boye-Moller, head of mortgages, Westpac said that he believes that there is a healthy level of competition in the market now, and within the Westpac group there are several brands competing internally as well.
Other financial institutions to join the roundtable were CBA, Aussie Home Loans, AMP Bank and Community First Credit Union.
However, Graham Mott, partner, Deloitte, said that he believes increased margins will actually assist in bringing smaller lenders back to the market.
Mr Mott also added that to attract competition into the market, margins still need to improve to ensure the economics stack up for those non-banks and non-majors to return, and that there was still a gap between an A-rated lender and a AA-rated lender in terms of the funding costs that are required to be bridged.
Also, three of the roundtable participants thought growth in home lending during 2010 would be between 0-5 percent, with six institutions expecting 5-10 percent growth, and only one anticipating growth above 10 percent, which is what the banking industry has become used to over the past decade.
Axel Boye-Moller, head of mortgages, Westpac said that he believes that there is a healthy level of competition in the market now, and within the Westpac group there are several brands competing internally as well.
Other financial institutions to join the roundtable were CBA, Aussie Home Loans, AMP Bank and Community First Credit Union.
However, Graham Mott, partner, Deloitte, said that he believes increased margins will actually assist in bringing smaller lenders back to the market.
Mr Mott also added that to attract competition into the market, margins still need to improve to ensure the economics stack up for those non-banks and non-majors to return, and that there was still a gap between an A-rated lender and a AA-rated lender in terms of the funding costs that are required to be bridged.
Also, three of the roundtable participants thought growth in home lending during 2010 would be between 0-5 percent, with six institutions expecting 5-10 percent growth, and only one anticipating growth above 10 percent, which is what the banking industry has become used to over the past decade.
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