At last some of the benefits of financial deregulation are dribbling down to ordinary Australians. Last week the Australian Bureau of Statistics issued figures showing that mortgage managers have taken 10 per cent of the home-loan market, largely at the expense of the major banks and major banks announced interest-rate cuts for existing customers. In the past, nearly all of the interest-rate reductions given by major banks were to new customers in order to attract market share. With the onslaught of mortgage managers, like Aussie Home Loans, Australian Mortgages Securities and others, they now see their existing client base being seduced by companies who can offer lower rates because they do not have to carry the huge overheads burden of a network of expensive suburban branches.
About 40 per cent of the business done by the mortgage managers in the past three months has been refinancing. That has been a stern lesson to the major banks. They can no longer take their customers for granted.
Further, NSW has abolished the stamp duty fees it charged on mortgage refinancing.
However, if the banks and other financiers are to be kept on their competitive toes, it is important for governments to ensure that all transaction costs are kept to a minimum so it becomes easier for mortgagors to shop and move to a different mortgagee without being hit with a range of fees. In particular, title searching and other conveyancing elements associated with refinancing must be made simple and cheap. With increasing computerisation there is no reason why this cannot happen.