HOMEBUYERS could save up to $80 a month on their mortgages under the Federal Government's $4 billion plan to boost competition in the lending market  but it could take months for the benefits to flow through to household budgets.

As prospects for quick action in the US to tackle the global financial crisis dimmed yesterday, a Treasury analysis revealed the extent to which competition in the Australian lending market has been eroded by the meltdown.

Non-bank lenders' share of the home mortgage market has shrivelled from more than 20% in July last year to less than 10% , after the crisis stymied the supply of cash available to smaller lenders.

Treasurer Wayne Swan has repeatedly urged disgruntled homebuyers to "vote with their feet" and switch to cheaper loans, but the growing dominance of the big banks means there is now little scope to do this.

Residential mortgage-backed securities  the key source of funds for the non-bank sector  are now being issued at a rate of around $830 million a month, compared to $6 billion a month before the crisis.