Australia’s most profitable bank, the Commonwealth Bank, says that mortgage brokers play a key role in ensuring a healthy and competitive market for consumers.
In its interim report, the Inquiry recognises the impact that vertical integration can have on competition.
“[Submissions argue] the major banks can cross-subsidise products to drive out competitors in some markets. Submissions also argue that the major banks’ market power has led to oligopolistic competition and higher prices for consumers.”
However, in its final submission to Murray’s Financial Services Inquiry released on Friday, CBA said that it is mortgage brokers who ensure that vertical integration in the banking system doesn’t impact healthy competition in the home loan market, or impact consumers negatively.
“The higher percentage of home loans directed to smaller lenders by mortgage brokers compared to the percentage of loans sourced directly by smaller lenders indicates that integration has not had a negative impact on competition, and has not distorted the way in which mortgage brokers direct borrowers to lenders.
“The mortgage broker proposition continues to see this channel account for a growing share of all mortgage flows, despite ongoing vertical integration in this sector.
“In addition, the increased flow of home loans directed to non-major banks by mortgage brokers is indicative of price competition delivering better outcomes for customers.”