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MFAA Prosper : Mortgage and Finance Brief 06
2 | Mor tgage & Finance brief CEO’s Message What we need is more and better competition! The firestorm that has raced across the nation’s media over the past few weeks has highlighted something MFAA has been banging the drum on at least since 2008: the lending sector needs more and better competition. It is in the very nature of our economic system that a market which doesn’t have too many effective players will likely produce a less than optimal result for consumers. Australia’s lending sector is in such a position and that has been exacerbated by events resulting from the GFC. In the early weeks of November we had: • the Shadow Treasurer Joe Hockey announce a nine-point plan and propose some regulatory amendments regarding the banking sector; • a Senate Inquiry established to report on competition in the banking sector; and • the Treasurer Wayne Swan indicate that the Government would make an announcement in December as to steps it would take to improve competitiveness. MFAA has long held the view that regulatory responses to market circumstances may be problematic and counterproductive. However sometimes Government intervention may be necessary to facilitate a competitive market. A key driver of competition in any market is access to information. Clearly brokers provide that information and representation of borrowers and accordingly are an important influence in maintaining competitive forces in the Australian lending industry. But another key driver lacking at the moment is access to competitive funding sources. In a Government Inquiry on the same issue in 2008, MFAA urged the Government to consider establishing a national mortgage-backed securities program to create a more competitive market that would allow smaller financial institutions to provide housing finance at competitive rates, similar to that operating in Canada since 1985. The Government chose not to accept that suggestion then but did inject some $16bn into the Australian securitisation market. While that has been of some help it is dwarfed by the $380bn issuances by the Canadian system since 2007. It is more compelling than ever that the Government rethink its attitude on supporting such a scheme in Australia. A competitive market is not only better for consumers; it also paves the way to more effective and efficient operations of all the players in the market. Phil Naylor Chief Executive of MFAA MORTGAGE & FINANCE BRIEF is the official magazine for members of the Mortgage & Finance Association of Australia. Chief Executive Officer : Phil Naylor Executive Director Marketing & Membership: Kriti Colless Marketing & Communications Manager : Marisa Ashworth Post: PO Box 604 Neutral Bay NSW 2089 T: (02) 8905 1300 F: (02) 9967 2896 E: email@example.com W: www.mfaa.com.au Published by: MAHLAB MEDIA Managing Director : Bobbi Mahlab Editor: Martin Wanless Advertising Sales Manager: Craig Ennis Art Director : Simon Wan G9/1-15 Barr Street Balmain NSW 2041 T: (02) 9818 8896 F: (02) 9818 6080 E: firstname.lastname@example.org W: www.mahlabmedia.com.au Printed by: Webstar Mailed by: Bluestar DM Cover photography: Andrew Mathison All material copyright MFAA . All rights reser ved. MFAA does not expect or invite any person to act or rely on any statement, opinion or advice contained in this publication and readers must rely on their own enquiries in making any decisions or giving any advice. Neither MFAA nor any employee or agent of MFAA nor any contributor to this publication will be liable for any loss or damage caused by any inaccurate statement, opinion, advice or information contained in this publication. CAB Member
Mortgage and Finance Brief 05
Mortgage and Finance Brief 07