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ISSUE 9.06 March 2012
Cracks set to appear in bank dominance
Tim Holmes
A new wave of
competition predicted to soon shake bank market power The formidable dominance of major bank lenders could be on the brink of ‘breaking’, with a cyclical rise in competition predicted to soon shake the foundations of their market power. Homeloans Ltd chairman Tim
Holmes has told Australian Broker that the story of lending in Australia has seen periods of consolidation, and then subsequent rises in competition. “I have seen these cycles come and go, and one truth remains absolutely steadfast: when banks get to positions of prominence as they are now, something breaks, and competition raises its head again,” he said. According to Holmes, the mortgage market could be on the
cusp of just such a resurgence in competition. “My feeling is it is about to happen again,” he said. In the 60s and early 70s, Holmes said it was building societies who managed to garner huge chunks of market share, which later slipped after deregulation of the financial sector. In the 80s and 90s, when securitisation allowed product to be delivered to the marketplace at margins the “banks hadn’t dreamed of”, it was the non-banks who delivered competition. Holmes said he thought overseas funders were now eyeing the Australian market, and that mortgage managers such as Homeloans were well positioned to distribute their product. “We are well-placed to distribute going forward, and make a pretty healthy margin. We are in every state, and we think by bolstering our distribution capacity, and with a proven track record in mortgage management, we will be ready to distribute new product,” he said. Holmes added that brokers will be integral to any lending renaissance. “A large organisation might look at a mortgage portfolio as a commodity that will deliver a return, marginalising the importance of the client or seeing them in terms of basis points.” “For the person who takes out a mortgage, it’s a huge decision – they are buying a house for not inconsequential sums,” he said. Holmes said that brokers meet that need, providing great service and great advice.
NAB’s new script Rewrite planned for loan document ‘horror stories’ Page 2
Last broker standing Independent aggregators to be swallowed by 2013 Page 6
On the hook ASIC baits ‘fee fishing’ commercial lenders Page 8
Inside this issue Viewpoint 20 Weston on brokers, London Opinion 22 Mohnacheff plugs education Forum 23 Brokers debate aggregators Insight 24 Office, or mobile? Market talk 26 The bubble never popped People 28 Advice from Jeremy Fisher Insider 30 STDs can really hurt