Essay example --

Most of Australians are affected by house contributes. 70% of inhabitancyowners buy a house in Australian finished the housing mortgage loan. Due to the optimistic attitude of the general public active the economic situation, a lot of people buy houses for renting erupt to obtain stable income. In 2010, the Australian Government authorized the Australian Securities and Investment Commission (ASIC) to regulate issuing tumbles that banks were seeking to impose. The exit fee is the payment that banks require customers to pay for permission to transfer their home loan to another(prenominal) bank, which considers the housing loan being one of the most central factors in exit fees or terminate. In an article of The Times, it was describe that an exit fee of $5,178 was charged if a loan of $300,000 was borrowed for 25 years and terminated within 3 years (Martin, 2010). Such an expensive exit fee makes high switching cost for the house loan takers, through which the bank may gain trade forces. This article impart talk about the switching costs in Australian home loan food market and analyze how these switching costs may increase market forces of suppliers in these markets. In addition, this article tries to find out that after exit fees is changed correspond to the new regulations, what the changes of supplier cost will be and whether their profits will increase or decrease.Switching costs in Australian home loan market Switching costs was first presented by Michael porter in 1980, referring to the one-off cost generated in the course of consumers transferring from one provider to another product or service provider. This cost includes not only frugality expenses, but also time, energy and emotion, being an important factor of constituting barriers to enterpri... ...lly, the sense of equilibrium is at point A (Q1, P1). With more rivalry and competition among suppliers, S1L shifts to the rights of S2L. The equilibrium point moves from point A to point B (Q2,P2) . As a result, loans price (interest rates) fall from Q1 to Q2 according to Graph 1. Profit is relate to total revenue of minus cost. While total revenue is touch to the price multiplied by the quantityprice is decrease.It undersurface be concluded that the Australian government to develop policies to protect the interests of topical anaesthetic people through the intervention of good housing loan market. The Australian governments move to provide a variety of options for Australians, they can freely choose, tour reducing the financial risks, the government provides loans to low-income persons through banks at below market rates, and they encourage healthy competition wwithin the home loan market.