There was a key missing question in yesterday’s Insiders interview with Wayne Swan, a question that should be enough to ensure the banks do indeed pass on all the looming RBA interest rate cuts.
Treasurer, do you think the Australian Securitisation Forum’s proposal for a Canadian-style mortgage bond system would introduce greater competition in the home loan market?
The answer is that the ASF’s proposal would resuscitate the near-dead non-bank lenders and immediately slash interest rates for owner-occupiers. And our Big Bank Club would hate it. The threat of introducing it is Swan’s biggest stick to restrain bank greed.
The ASF campaign received a major setback last week when RBA assistant governor Philip Lowe spoke against the “unintended consequences” of government structures to increase the supply of credit. He was of course being economically rational – but he doesn’t have to get elected again in two years to keep an enhanced pay packet.
There is also a question about how serious the federal government actually might be about helping home buyers. For all the political handwringing, the harder heads know Australia already invests plenty in its housing stock, possibly too much.
But if you were a big, rich bank continuing to report record profits and looking forward to increased cartel power having burnt off the non-club competition, you wouldn’t want to tempt a federal treasurer by being too greedy right now.
Now, Wayne, just what do you think of the ASF scheme?
Re Michael Pascoes item on how the government can help house buyers, I think there is case that it is renters who should be helped and buying houses discouraged. This could be part of the solution to the congestion on our roads and public transport. House owners are less likely to move than renters. If people could be encouraged to move close to their workplace there are several advantages apart from reducing congestion. If people lived close enough to their workplace that they could ride or walk to work they would be healthier, there would be less pollution, they would save money and our petrol consumption would be reduced. The government should be encouraging big companies to provide rental accommodation for there workers.
A good article. The banks are building their empire now using higher rates due to the credit crunch and the destruction of their competitors and the cheap bank valuations to buy their competitor mates.
this credit crunch was the best thing to happen to the big four banks in many years. RAMS gone to westpac, Aussie HL, disappeared, Maquarie out of the mortgage industry, most smaller loan orignators gone as well.
less competition than they have had in 10 years. This is good for no one except the big four.
cheers
This is one of the stupidest articles I have yet read on Crikey. Loose credit (ie government-sponsored debt enslavement for the masses) is the reason we are about to experience a global depression for the next 10 years or so. The last thing we need is for there to be MORE bubbley housing debt creation. I really don’t understand this freaking obsession with wanting everybody to get themselves into more and more debt in the guise of “home ownership”. No, it is not “home ownership”. It is called DEBT SLAVERY. It’s a poverty trap. Come September, the meltdown in the USA is going to esculate, and the last thing that Wayne Swan, the RBA, Aussie banks and any of the legions of debt slaves out there are going to be worried about pumping another debt-fuelled housing bubble. Come on Crikey, enough of this trash.