A former chairman of the corporate watchdog, Greg Medcraft, is pushing for the introduction of a Canadian-style mortgage bond market that he says will boost lending competition in Australia, resuming his long-running war against the big banks which enjoy a funding advantage over smaller lenders.

Mr Medcraft, who pursued the big banks over interest rate rigging and allegedly lax lending standards during his term at the Australian Securities and Investments Commission, said an agency system where government-backed bonds were used to finance home loans would lead to lower rates for borrowers.