Reserve Bank of Australia's Assistant Governor Guy Debelle recently shared that the current ongoing competition between various Australian banks, both big and small, will not let the major banks, which presently dominate the market, widen the interest rate margins paid, despite the slump in mortgages sold by smaller banks, all because of the global credit squeeze.

“There are good reasons to think that competitive pressures will continue to restrain the ability for any margin- widening on the part of the larger banks”, Assistant Governor Debelle said. "The housing-loan market remains contestable, even if there are not as many competitors currently. Any excessive widening in margins will attract new competitors back into the market".

For many years now, the country four biggest banks, Commonwealth Bank, Westpac, National Australia Bank and ANZ, have dominated the mortgage and lending sector, and the recent decline and seizure of many small banks who crumbled under the financial crisis has increased the number of people turning to these big banks manifolds. In order to now stay at the top, and continue dominating the market, these banks cannot risk widening the margin or increasing interest rates.

Mr. Debelle's observation has come as good news to the general population and many new buyers.