As all participants in the Australian financial industry continue to review the impact of the credit crunch on their own specific business models, the events of the last twelve months have had particularly harmful implications for non-bank lenders. It is now clear the future of the non-bank lending sector and the competition it brings to the marketplace has been placed in jeopardy and has, by necessity, placed the issue firmly at the Federal Government’s feet. The competition provided by non-bank lenders in the mortgage market has proven financially beneficial for consumers and must be preserved. The Securitisation Market is now an essential vehicle for most lenders operating in the mortgage market to obtain funds outside of deposit bases and must be endorsed and supported as such by the government. Consumers will always benefit from innovation and choice but dedicated education programs must keep pace with the variety of loan products in the market. It is clear that bank behaviour hasn’t inherently changed from the days prior to deregulation, when their standard variable rates were well above the official cash rate, and shareholders were top of mind, above customers. Even now, as recently as early July the banks have publicly acknowledged that further rises are not out of the question in what they deem as necessary in offsetting their exposure to capital markets - and some have already started to move. So, the big question is - how can we ensure we don’t return to the monopoly by banks and all the confines it brings with it, whilst more consumer-friendly alternatives still remain an option through the competitive offerings of non-banks? A new government backed mortgage lending agency issuing bonds available to the nonbank sector, as part of a broader nationally regulated platform on consumer credit, would ensure that this vital sector continues to provide the competition necessary for consumers to benefit from the mortgage market.    

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