The MFAA has come out in defence of brokers and mortgage borrowers who it says are 'paying the price' of dwindling lending competition as non-banks 'wither on the vine'.
As part of a submission to a Senate Economics References Committee Inquiry, the MFAA has lambasted the exit fee ban, and reiterated arguments for imitating Canada's system.
"It is clear there will be no long-term meaningful changes to bank competition unless there is a strong and viable non-bank lending sector," CEO Phil Naylor said.
"The rise in wholesale funding costs and the closure of securitisation markets continues to compromise the business models of non-banks, regional banks and mortgage brokers."
Naylor said broker clients were 'paying the price', with 90% of mortgages coming from major banks.
“We need to adopt initiatives similar to those taken by the Canadian Government to successfully stimulate competition in the banking sector to the benefit of borrowers and the wider economy," he said.
Naylor said the Canadian government had injected $300bn in National Housing Act mortgage-backed securities and bond programs over the last five years.
The Canadian Mortgage Bond system assists competition by ensuring there is a quality flow of securitised funds available to non-bank and bank lenders, giving consumers more choice.
“Our uncompetitive market manifests itself in poor service levels and lack of availability of products," he said. "A market dominated by four large players who hold over 80 per cent of the market share is not normal. Few people would agree the current position is good public policy and in the interests of the wider community.”
Lobbying better from inside the tent: MFAA