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Aussie John changes tune on big banks

Massaging the message: John Symond in front of a Gerard Rancinan photo artwork. Photo: Peter Braig Massaging the message: John Symond in front of a Gerard Rancinan photo artwork. Photo: Peter Braig
Aussie Home Loans founder John Symond, who helped ignite a wave of mortgage competition against the banks in the 1990s, has rejected claims that competition in home loans is inadequate such is the rivalry among the big four banks eager to lend money for housing.

With big bank dominance under scrutiny from the financial system inquiry, smaller lenders and consumer groups are concerned that the big four banks benefit from an "unlevel" playing field in the $1.3 trillion mortgage market.

But Mr Symond rejected claims that competition in home loans was inadequate

"You don't need any more competition in housing loans. Australian borrowers have got the best deal in the world," Mr Symond said.

Helped by record low interest rates fuelling a housing boom, banks' main priority was clearly lending for housing, he said.  

"The only area where they want to compete vigorously is mum and dad housing. Not credit cards, not business lending, not development finance – mum and dad housing," he said.

"Consumers have got lenders tripping over each other to get their business, some of them are even offering $1000 cash and no expenses and all that, loans with all the features and flexibilities that you can't get anywhere in the world. We take things for granted."

Rather than focus on housing, he said more competition was needed in lending to small businesses or property developers.

Mr Symond also brushed aside concerns about banks' growing control of mortgage brokers.

The Commonwealth Bank agreed to increase its stake in Aussie to 80 per cent in December 2012, a deal that delivered Mr Symond $185 million in CBA stock at the time. It comes  as "vertical integration" - banks' growing control of related industries such as broking and wealth management - is under the spotlight.

Regional banks last week said they did not have firm evidence that bank ownership was affecting mortgage broker decisions about where they directed clients, but cited anecdotal reports of "distortions" and called for increased disclosure about mortgage broker ownership.

In response, Mr Symond said the trend towards growing control by banks had already occurred in other countries with more "mature" markets than Australia's. Besides, he said, the concern was irrelevant to consumers seeking a better deal.

"So long as consumers believe they are getting a good deal, they don't care where the money comes from. It's like going to a service station. You need petrol and you need super, do you jib at whether it's BP, Caltex or Shell? If you need it, you're going to take, generally one of those, without saying 'who own's Shell? Who owns BP?' " he said.

In the seven years since CBA took a 33 per cent stake in Aussie, the bank's share of mortgages written by Aussie had reduced by about 20 per cent, he said.

Helped by a property market boom, Aussie posted a 18 per cent rise in home loan settlements last financial year, to $17 billion.  It plans to increase its staff numbers by 200 over the next year. Last month the broker's chief executive, Ian Corfield, resigned to return to England.

Author: Clancy Yeates
Source: The Age


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