Former Wizard Home Loans boss returns to mortgage market
A new entrant in Australia’s home loan market backed by Wizard Home Loans founder Mark Bouris hopes more competition will put pressure on the big banks to keep any interest rate rises to a minimum.
Mr Bouris, the executive chairman of wealth management company Yellow Brick Road, said he was “delighted” to be back in the home loan business.
Yellow Brick Road, formed in 2007, said on Sunday it will begin offering home loan products after teaming up with Gateway Credit Union.
Mr Bouris said the arrival of new players in the home loan market was needed to “keep the big banks honest and ensure that there’s strong competition in the marketplace”.
He said the major banks had been able to raise interest rates without fear of losing market share after most non-bank lenders were forced out of business or taken over as a result of the global financial crisis.
“Increased competition will mean that the big banks will have to think twice about raising interest rates beyond the official rate or risk losing market share to us,” Mr Bouris said in a statement.
This month, three of the four major banks raised their variable mortgage rates by more than the 25 basis point increase in the cash rate announced by the Reserve Bank of Australia (RBA) on December 1.
The most severe rate hike came from Westpac, which lifted its borrowing rates by 45 basis points, almost double the official move.
Mr Bouris founded Wizard Home Loans in 1999 and sold it to GE Capital for $500 million five years later.
He said Yellow Brick Road was expanding its branch network and hoped to have 30 branches by the end of March next year, from its current 10.
The chief executive of Gateway Credit Union, Paul Thomas, said the new home loans products would give Australians greater choice.
“This kind of competition is what’s needed in today’s marketplace in order to maintain downward pressure on fees, charges and rates,” Mr Thomas said in a statement.
AAP
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Ian Jervis - Paradime Home Finance NSW December 14, 2009
The Bank of Queensland’s CEO David Liddy was quoted as suggesting that we are headed for a “retail style oligopoly” in relation to our banking system, and this announcement just seems to confirm it.
First you have Aussie John on his soap box promising to keep the banks honest, then he sells a large chunk of his business to the CBA and has his funding provided by the CBA, Mark Bouris sells Wizard to GE who sell it to CBA and now Bouris is coming back into the industry through Gateway Credit union. Whilst Gateway CU may protest their independence from the CBA , they started out as the CBA staff Credit union, so its no prizes for guessing who funds Gateway and in turn Yellow Brick Road.
We are on the road from an Oligopoly to a duopoly and all the roads (yellow brick or not) are leading to the CBA. Graeme Samuel’s needs to have a long hard look at the abject failure of his decisions in terms of industry competition if presented with similar takeover requests in the future that he has approved in the past, lest David Liddy be proved correct.