Proposed changes to the banking landscape in Australia could potentially lead to cheaper mortgages, which may encourage increased investment in property across the nation.
Treasurer Scott Morrison is looking to introduce reforms to the country's banking sector, which would see credit unions and building societies allowed to call themselves banks in the future, subsequently increasing the number of players in the mortgage market down under.
The Australian government wants to reduce the power currently held by the nation's big four banks - the National Australia Bank, the Commonwealth Bank, the Australia and New Zealand Banking Group and Westpac - which are seen as dominating the mortgage lending market and restricting the number of options available to prospective home buyers.
Mr Morrison believes that allowing more mortgage lenders to call themselves banks will lead to a healthy increase in competition across the market, presenting borrowers with more options.
As a result, it is hoped that the quality of home loan deals will improve, with more affordable options for property investors and those looking to get a foot on the housing ladder.
At present, only financial institutions that have capital of more than $50 million are allowed to call themselves a bank, but if the government's proposed reforms are passed in parliament, around 60 credit unions and building societies will be able to change their identity. Mr Morrison hopes that this will flood the mortgage market with a wealth of new options for consumers and investors.
Similar reforms have previously been introduced in the UK, which encouraged more competition and increased options for consumers looking for a mortgage deal.
Speaking to the Herald Sun, Mr Morrison explained: "Allowing more lenders to be called banks will mean better access to cheaper loans and more generous deposit rates for Australians. It will encourage smaller and online lenders to set up shop in Australia, offering more competitive loans and products to customers.
"This is about giving Australians more opportunities to get a better deal for their home loan and their deposits."
