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Plenty of competition in mortgages says RBA

20/11/2009

Assistant Governor of the Reserve Bank, Guy Debelle said competition in the mortgage market would remain stiff enough to stop banks from widening their margins on loans, even though many non-bank lenders had left the business.

"The housing loan market remains contestable, even if there are not as many competitors currently," he said.

"By that I mean that any excessive widening in margins will attract new competitors back into the market.”

Mr Debelle said there had been no serious restrictions in the supply of housing credit throughout the global financial crisis.

"Growth has slowed, but to an annual rate of eight per cent, which in some countries is regarded as high," he said.

A rise in costs had compressed margins on home loans, though this had been offset by widening margins on business and personal loans.

Source: Business Spectator/Reuters

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