Banking reforms due soon: Swan

Just days before Treasurer Wayne Swan is due to release his much anticipated banking
competition reforms, new data showed that non-bank lenders secured their largest
growth in the mortgage market in more than eight years.
Mr Swan confirmed he would release his new measures within the next week after
having consulted with regulators, and would work closely with the industry on their
implementation.
While he kept mum on detail, he conceded there were "no silver bullets" to boosting
banking competition.
"We're working on measures to make it that little bit easier to walk down the street
and get a better deal," he told a financial services forum in Brisbane on Wednesday.
Still, new data on Wednesday showed that non-bank lenders secured a 12 per cent
increase in the number of loans granted in October compared to September, the
largest monthly growth since May 2002, and dwarfing the 0.4 per cent rise among
traditional banks.
Overall, almost 50,000 loans were taken out in October, the highest number since
January, and a 1.9 per cent increase compared to September.
However, this was before the November rate rise, which saw the average standard
variable mortgage rate jump to 7.8 per cent from 7.4 per cent.
"There should be little doubt that housing finance will fall sharply into the end of
2010 as a result," RBC Capital Markets strategist Michael Turner said.
More homebuyers also sought the comfort of a fixed rate home loan in October,
accounting for 6.9 per cent of all home loans approved in the month, the largest
proportion since July 2009.
Industry sources say the number of fixed rate loans grew even further in November in
reaction to the rate increase.
But first time homebuyers remained reluctant to enter the market against the threat
of rising interest rates, making up just 15.4 per cent of loans granted in October,
the smallest amount since July 2004.
While demand for home loans is likely to be modest in 2011 as interest rates rise
further, strong employment growth and an under-supply of new homes will provide
underlying support for the market, economists say.
Labour force data for November are released on Thursday.
Economists expect the jobless rate to fall to 5.2 per cent after the unexpected
spike to 5.4 per cent in October.
That unemployment rate rise was due to a record number of people seeking work.
A 20,000 rise in the number of jobs created, is also forecast.
The federal government's leading employment index released on Wednesday rose for an
eighth straight month in December.
"This confirms that employment can be predicted to grow more quickly than its
long-term trend rate of 2.3 per cent per annum in coming months," the Department of
Education, Employment and Workplace Relations said.
The government is predicting employment growth of 2.5 per cent in 2010/11, and a
jobless rate of 4.75 per cent by June 2011.
Finance Minister Penny Wong said that while risks still existed in the global
economy, Australia's economic fundamentals remained solid, even though last
Wednesday's national accounts showed only patchy private sector growth.
"The foundations are solid, fundamentals are solid, we know we have a very large
pipeline of investment and we are seeing that in many sectors of the economy,"
Senator Wong told reporters in Canberra on Wednesday.