Since the Australian market is almost regulated by its mortgage system hence the government wants more foreign banks to enter and grow their local operations in the country.
The reports reveal that international banks have a very little share in the stock market of Australia that is already dominated by its four big local banks. And these banks control near about 90 per cent of the mortgage market of the continent. Recent updates show that two of these four big banks have increased lending rates more than the central bank of the country last week to prompt Canberra promise reforms for making mortgage market more competitive.
Besides concentrating on the smaller lenders, the government now wants to strengthen more foreign banks to nurture in Australia with Citigroup Inc. (C), ING Groep NV (ING), as well as a few large international banks which wish to prosper their mortgage businesses throughout Australia.
Talking to media personals, Australia’s Treasurer Wayne Swan revealed that they welcome all major and minor foreign investments who had a desire to work in the Australian market.
In an attempt to suppress public outcry against the country’s big banks to prompt government reaction, both Australia New Zealand Banking Group Ltd. (ANZ.AU) and Commonwealth Bank of Australia (CBA.AU) have raised their mortgage rates by 45 to 39 percentage points to hit borrowers after the Reserve Bank of Australia rose its cash rate 25 percentage points to 4.75% previous week. Around 90% of home loans are on variable rates in Australia.
As far as consumers are concerned who are already under pressure of inflation, this adds around A$100 that is US$100 to the average A$300,000 for Commonwealth Bank as well as A$85 mortgage for ANZ every month. National Australia Bank Ltd. (NAB) and Westpac Banking Corp. (WBK) have yet to declare their new lending rates in the wake of hike registered in RBA.
Given the dominance of large local lenders in major cities and the prohibitive fees charged for shifting a mortgage to a new lender, international lenders have been struggling to get a foothold in this thriving economy with both a real-estate and mining boom.
Story by Rajarshi Dutta www.forexdice.comTags: banks, economy, finance, interest rates, money