Powered by MOMENTUM MEDIA
Broker Daily logo

Treasurer highlights critical role of smaller lenders

Treasurer highlights critical role of smaller lenders
expand image

EXCLUSIVE: The federal Treasurer has flagged the importance of smaller lenders and brokers in providing mortgage competition. 

Speaking in an exclusive interview with Momentum Media director Alex Whitlock, federal Treasurer Josh Frydenberg has acknowledged the valuable role that non-major and non-bank lenders have in keeping competition alive.

During the interview, Mr Whitlock asked the Treasurer his thoughts on how the early challenger lenders, such as Wizard and Aussie, had helped drive competition in the 1990s and the role that brokers continued to play in keeping home loan rates low.

In response, Mr Frydenberg said that smaller lenders, and the brokers that helped distribute their products, were helping drive competition.

==
==

He said: "[Brokers] do provide a boost to competition because – particularly for the small lenders who don't have the national footprint this gives them the ability to promote their products ...

"They're able to give smaller lenders the ability to sell their products more broadly. Because if [smaller lenders] don't have the mortgage brokers given that they don't have that national footprint, necessarily, like the big banks then, you know, they're hindered in their ability."

Mr Frydenberg added that the distribution benefits of the broking industry for these smaller lenders therefore helped provide more competition in the mortgage market.

"So, we'll continue to encourage competition, we'll continue to encourage choice. And, some of those pioneers that you've indicated, I think they've been a net positive for the market," he said.

The Treasurer was also asked about his thoughts on the hot property market and its role in the economy into 2022.

After noting that we had been experiencing "a very strong property market", which has "been reflected in price movements", he estimated that the housing sector was now worth around $10 trillion and that, for most people, property was "the biggest asset that they have".

The Treasurer flagged the role that the government's support schemes such as the HomeBuilder, First Home Super Saver Scheme, and government-backed loan guarantee schemes have had in helping more buyers get onto market.

"We have obviously supported the construction industry and the housing sector with the HomeBuilder program. We've committed over $2.5 billion dollars, Alex, to that particular program. We saw over 130,000 applications, and it is expected to support more than $30 billion in residential construction. [I]t's supported new homes as well as substantial renovations. I think it's been a very successful program," he said.

"We've also had other initiatives like the First Home Super Saver scheme, which I increased in the budget from $30,000 to $50,000, which are the voluntary contributions that can be released towards a deposit for a first time buyer.

"And then we've also got the home guarantee schemes where we've seen more than 50,000 people, homebuyers, being able to enter the market under that scheme."

He continued: "So, the combination of historically low interest rates, as well as programmes like our HomeBuilder, First Home Super Saver scheme, and home guarantee schemes, I think have been very important in driving economic activity and driving greater homeownership."

Mr Frydenberg added that this property cycle had seen a large increase in the number of first home buyers, and owner-occupiers more generally, entering the market.

"[F]rom the beginning of the year to July, Alex, there's been more than 170,000 first home buyers. [T]he 10-year average across the country has been around 100,000. So, this is a big jump in first home buyers, and we welcome that we encourage it," he said.

"And the fact that people get a toe into the market, or a foothold in the market, if you want to use another analogy, then I think it's a good thing, because it helps set them up for greater economic security into the future."

This story is one in a series of articles from the interview between Momentum Media director Alex Whitlock and federal Treasurer Josh Frydenberg. You can find out more about Mr Frydenberg’s thoughts on Australia’s economic recovery here and his thoughts on how brokers help shape competition in home lending on our sister title, The Adviser.

[Related: Federal Treasurer backs economic recovery as NSW emerges from lockdown]

More on Lender
02 December 2024
The data for total loan numbers has come in and one bank is hot on the heels of the majors with strong numbers and solid ...
02 December 2024
The major has been working to improve customer choice by investing into its branches, providing added flexibility and ...
28 November 2024
In this episode of Business Accelerator with hosts Alex Whitlock and Jason Back, the topic delved into tech in broking