Treasury officials are said to be preparing options that will make it easier for regional banks and non-bank lenders to access funds and therefore to offer lower mortgage rates.
“The possibility of Federal Government support is appropriate and welcome,” said Phil Naylor, CEO of the MFAA.
“Australian consumers have, over the last decade or so, benefited demonstrably from the competition provided by non-bank lenders in the mortgage market.
“Interest rates were probably two percentage points or more lower than they would have otherwise been, and a far wider range of products was available for borrowers.
“However that has all but disappeared with the collapse of securitisation.
“Reserve Bank data shows that the difference between its cash rate and the standard variable rate charged by the major banks is increasing for the first time in nearly 20 years; this is not good for homebuyers.”
The government has already invested $8 billion in mortgage-backed securities — which Mr Naylor described as “a welcome kick-start” – and is reportedly considering expanding this program to $30 billion.
“I appreciate the government’s recognition that more needs to be done; Government intervention in the market is not ordinarily welcome or appropriate.
“But in such extraordinary times — when it’s clear that the Australian lending market is no longer operating competitively to the benefit of borrowers – it’s appropriate for the government to intervene with steps to improve competition,” he said.