Comment: Big banks open the doors to nimble NBFIs

At least three of the inevitabilities of banking's cynical cycle are on display in the Australian finance sector at the moment, in the wake of product pricing changes on residential investment loans last week by ANZ and Commonwealth banks than came just one day apart.

The two banks placed behaviour which could see them at risk of accusations of cartel pricing on rich display at the end of last week, hiking investment loan rates as a rationing mechanism on a product line in heavy demand.

Both ANZ and CBA, one assumes, were already reaching rate of return targets on investment loans before last week, so lifting the margins can only widen returns in a key product segment.

Rationing demand through the stringent application of credit criteria (itself a risk reducing and margin protection measure) was jettisoned in favour of a mechanism that will lift return on equity, sharply and quickly.

There may be some background noise on the necessity to produce additional profits to service the elevated levels of capital that APRA (but no so much the industry) considers they need. But the extra capital is not required for another year and the two banks so far involved in this oligopoly conduct have shown no great enthusiasm for producing the capital buffers Australia's prudential regulator demands (NAB being an exception in the sector).

The voluntary assumption of an elevated pricing point on investment loans can only be a favourable development for lenders operating outside of the APRA-regulated, deposit taking environment.

For the likes of Pepper Group (which lists on the ASX at the end of the week), Liberty Financial, Latrobe Financial, Resimac and FirstMac, to rattle off the five principal names, the big banks have thrown the door wide open to a promising business opportunity.

So there's some good news at least.