The consumer watchdog has flagged concerns that competition in the $2 trillion home loan market is weakening, raising the prospect that borrowers will be hit with more expensive loans and repayments.
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Rejecting ANZ Banking Group's bid to acquire second-tier bank Suncorp, Australian Competition and Consumer Commission deputy chair Mick Keogh warned that the home loan market was "already at risk of coordination between the major banks".
"While there is evidence of increased competition in the home loans market recently, including in the form of cash-back offers to consumers, we are not persuaded that this level of competition will continue," Mr Keogh said.
![The ACCC official said recent public comments by bank bosses were concerning. Picture by Dion Georgopoulos The ACCC official said recent public comments by bank bosses were concerning. Picture by Dion Georgopoulos](/images/transform/v1/crop/frm/202296158/2fc2e9e5-35ec-4a9d-b53d-f2a00135f986.jpg/r0_182_3568_2188_w1200_h678_fmax.jpg)
The ACCC official said recent public comments by bank bosses about stepping back from aggressive promotions was concerning.
"If this market was truly competitive, we would not expect to see banks publicly flagging plans to reduce the competitiveness of their offerings," Mr Keogh said.
The ACCC knocked back the ANZ-Suncorp deal because it was not convinced the acquisition was "not likely to substantially lessen competition in the supply of home loans nationally".
"Second-tier banks such as Suncorp Bank are important competitors against the major banks, especially because barriers to new entry at scale into banking are very high," Mr Keogh said.
"The proposed acquisition of Suncorp Bank by ANZ would further entrench an oligopoly market structure that is concentrated, with the four major banks dominating."
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The ACCC official warned that a substantial lessening of competition in the home loans market would have "major flow-on impacts to Australians with a mortgage".
Treasurer Jim Chalmers declined to comment on the specifics of the proposed ANZ-Suncorp takeover, saying he respected the independence of the regulator.
"I want to thank the good people of the ACCC for all of the work that has gone into this since the second half of last year when this deal was first floated and the application was first made," he said.
The treasurer said there were "avenues now for the interested parties to appeal that decision and challenge that decision if they would like to. This process is at arm's length from the government".
Assistant Minister for Competition, Andrew Leigh, said the government was concerned to foster a competitive mortgage market, including by reducing the barriers to people switching lenders.
"It is clear that the Australian economy has a competition problem," Dr Leigh said, noting that there has been an increase in market concentration and product markups and fewer startups and job-switching.
"In the 1990s, competition reforms helped spur productivity growth, putting $5000 a year in the pockets of the typical household," Dr Leigh said. "We're actively considering competition reforms today to build a more dynamic economy."
Mr Keogh said the proposed ANZ takeover of Suncorp would have increased the likelihood that the major banks would have adopted "a 'live and let live' approach to each other, aimed at maintaining or protecting their existing market shares".
The ACCC thinks the home loan market is already at risk of "coordination" between the major banks, he said, citing their ability to price signal, their similarities in size and structure, the stability of the current 'four pillars' structure of the industry and barriers encountered by other banks trying to break into the market.
Increased symmetry between competitors can increase the likelihood of coordination, as there is less incentive to upset the status quo and try to win market share by aggressively competing for customers, Mr Keogh warned.