The Coalition Government has today directed the Australian Competition and Consumer Commission (ACCC) to undertake an inquiry into the pricing of residential mortgage products.
The inquiry will ensure the pricing practices of Australia’s financial institutions are better understood and made more transparent by;
- Investigating the prices charged for residential mortgages across the entire market, including by major banks, smaller banks, and non-bank lenders,
- Considering how banks make pricing decisions, including passing on movements in the official cash rate,
- Examining differences in the prices paid by new and existing customers,
- Examining differences between the reference interest rates published by suppliers and the interest rates paid by customers, and
- Investigating barriers that may prevent consumers from switching lenders.
The inquiry supports the Government’s commitment to promoting competition and good consumer outcomes in the residential mortgage market. In particular, the Government has implemented a number of major reforms to increase competition across the banking industry including:
- Passing legislation relating to the Consumer Data Right which empowers consumers to seek out banking products better suited to their needs;
- Allowing APRA to streamline the creation of new banks which has resulted in five new banks being established in the last two years; and
- Providing co-operative and mutual banks more flexibility to access capital to enable them to compete more effectively with larger banks.
The Government has provided the ACCC with $13.2 million of dedicated funding to undertake regular inquiries into specific competition issues within the financial system.
The ACCC will deliver a preliminary report by 30 March 2020 and a final report by 30 September 2020.
