Following a request from the ACCC, confirmed by the ACCC Chair at a recent House of Representatives Standing Committee on Economics hearing, the Treasurer has directed the ACCC to conduct an inquiry into bank residential mortgage price competition including the role of small banks and non-bank lenders in competition.
The inquiry will be specifically requested to report on 3 issues:
- how banks make pricing decisions for their residential mortgages, including their response to official movements in the cash rate. This will take into account such factors as the bank’s borrowing costs and their profit margins;
- the extent to which the prices paid by new and existing customers differ, as well as the difference between the reference interest rates published by suppliers and the interest rates paid by customers;
- whether there are impediments to consumers switching and, if so, what action could be taken.
The ACCC will be requested to deliver its interim findings on pricing decisions by 30 March 2020.
The ACCC’s findings into impediments to switching banks will be in the final report due 30 September 2020.