ANZ and Suncorp Bank merger back on – what does this mean for refinancing?

The merger between ANZ and the banking arm of Suncorp is set to proceed, with a previous block from the competition watchdog being overturned. But what does this mean for Australian mortgage holders? 

Why was the ANZ and Suncorp merger blocked?

The proposed merger was first announced in July 2022, and would see ANZ take over Suncorp’s banking operations, so Suncorp could concentrate on its insurance business. However, the deal was blocked in August 2023 by the Australian Competition and Consumer Commission (ACCC), citing competition and coordination concerns in the home loan market.

For example, at the time the ACCC described the big banks choosing to roll back cashback offers as a possible example of market coordination, saying that “if this market was truly competitive, we would not expect to see banks publicly flagging plans to reduce the competitiveness of their offerings."

What changed the decision?

However, the Australian Competition Tribunal recently announced that it would be overturning the decision, arguing that the conditions for coordination have recently reduced. Some of the factors contributing to this included “the material asymmetry in the market shares of the major banks, the emergence of Macquarie as a ‘maverick’ in the market, and the increasing use of brokers that has reduced consumer choice frictions, facilitating greater customer switching".

While ANZ and Suncorp have understandably welcomed the news, not all banks are happy. Bendigo and Adelaide Bank, which had been put forward as a possible alternative merger partner for Suncorp, said in a statement that “the proposed merger will lead to a lessening of competition, leaving customers and communities worse off.”

What does this mean for borrowers?

Suncorp’s current customers won’t need to worry about waking up tomorrow and discovering their bank branches, apps and websites have been painted in ANZ blue - as part of the merger, ANZ licensed the Suncorp Brand for another five to seven years, and committed to maintaining its current branch footprint in Queensland for at least three years post completion.

Upon completion, the merger could make ANZ the third largest of Australia’s big four banks, outranking rival NAB. But with the lion’s share of home loans in the country being controlled by these four banks (around 72% according to the Australian Competition Tribunal), what other options are available for Australians looking to refinance their home loan to an alternative deal?

One could be to look to alternative mortgage lenders. While the Australian Competition Tribunal named Macquarie specifically as a ‘maverick’ competitor to the big four, there are also a wide variety of other smaller banks and nonbank lenders that may be able to offer competitive home loans deals that you can refinance with.

The Australian Competition Tribunal also specifically mentioned that mortgage brokers can help facilitate home loan customer switching. Brokers can negotiate with banks on your behalf to help you get a better refinancing deal, and may be able to access exclusive mortgage offers that aren’t normally advertised. And of course, a broker can also manage a lot of the paperwork on your behalf, making switching home loans much less complicated than going it alone.

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