Banks - control of the mortgage spigot !

There is a glaring difference between banks in Australia - and what happened to banks in America and the United Kingdom during the world recession.

American and British banks needed huge injections of government funds to keep their doors open, and now the government is their biggest shareholder. Accordingly, the government rules the roost when it comes to implementing divestment plans, management of toxic assets and limits on executive pay.

In Australia the big four rode out the recession without such help. All that was needed was a government guarantee that depositors funds were safe. In fact, the recession here handed the banks power to eliminate a surging threat to their dominance.

A fast emerging plethora of finance outfits offering home mortgages was driving down interest rates - and offering that word " competition " - which was anathema to the way banks traditionally conduct business.

The interruption to the money flow caused by recession panic cut off these home mortgage houses at the knees - and the opportunistic banks jumped in and quickly absorbed them - and kept them trading under bank management.

Now the good times are again starting to roll - and the banks are on top with majority control of the home finance spigot.

Interest rates are on the rise and the future looks bleak for those needing a home purchase mortgage. We are likely to see less innovation in lending practice and the " Scrooge " attitude of big institutions will prevail when applicants are forced to go - " cap in hand " to their bank manager for a loan.

Just when home finance was starting to loosen up and take on a modern image, along came a recession and tossed it back into the dark ages.

And the banks are now laughing - all the way to - the bank !