The organisation of small non-bank lenders in Australia will continue the battle to extend competitive mortgage fees as against the big banks.

The Senate's decision to uphold the government's National Consumer Credit Protection Act regulations beginning on July 1 will ban exit fees in mortgages, which does not exempt small non-bank lenders.

However, the MFAA which had sought an exemption for smaller lenders from the banning of exit fees, has said while it accepts the decision of the parliament, the fight for a competitive mortgage market will continue.

The MFAA had advocated for the ban on mortgage exit fees to include an exemption of small non-bank lenders, based on the fear that without exit fees the non-banks will find it hard to compete and that with less competition, interest rates would increase for all Australians.

"It became clear during our lobbying that there are many in Parliament who share our concerns that the breadth of competition in the mortgage market needs to be enhanced in order to keep interest rates low," said MFAA CEO Mr Phil Naylor.

Recent Australian Bureau of Statistics figures confirmed that smaller lenders now have only 1.0 per cent of the Housing Finance market, down from their 13.6 percent market share just prior to the GFC. The banks now have a market share of 92 percent.

"Non-bank lenders are synonymous with bringing down the margin on home loans in Australia," said Mr Naylor, "making mortgages more affordable for all Australians."

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