Madness – Aussie borrowers in “mortgage prison” as banks prevent access to lower rates

The peak body representing Australia’s mortgage brokers says thousands of Australian mortgage holders left in a “mortgage prison” – unable to refinance to a lower interest rate due to changed lending criteria by banks – should look to non-bank lenders for help.

Peter White, executive director of the Finance Brokers Association of Australia, (FBAA) has also called on the Government to step in and push lenders to be more realistic with modelling.

He explained that banks have recently increased the interest rate ‘buffer’ they add onto a loan to ensure the borrower has capacity to pay if rates rise, but says the extent of the increase has led to the ridiculous situation of borrowers who are already paying a mortgage, being rejected for loans that actually reduce their repayments.

“It’s madness. Someone wants to refinance to pay a lower rate yet the bank adds an extra four per cent to the interest rate and decides the borrower can’t afford to pay less!

He said while it’s normal for a lender to add two per cent to the prevailing interest rate as a measure of safety if rates rise, lenders are now effectively doubling the rate to a level where the borrower can’t meet the new lending criteria.

“The rate the banks are now using makes it impossible for many people to refinance, locking them into higher rates.

“This doesn’t affect the wealthy, it affects those who can least afford it, and it has almost stalled the home loan refinance market.”

The assessment change is a knee-jerk reaction by the banks to recent inquiries and the royal commission, according to Mr White, who predicts the banks may start to set an even higher rate.

He said he has directly urged the Federal Government to step in, but borrowers in this position should also look to non-bank lenders that are not under some of the same regulatory oversight.

“This is where the knowledge of finance brokers can help. There are a number of these lenders who will calculate a refinancing rate at more realistic levels, so I’d advise those wanting to refinance to contact a broker and ask the question.

“The banks certainly won’t help you”

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ABC broker clarification not enough

A clarification earlier this month by the ABC of incorrect information broadcast about mortgage broker qualifications does not fix the damage done to the industry’s reputation, according to the national peak body representing finance brokers.

In March, on the back of misinformed reporting during the banking royal commission, the ABC’s chief economic reporter Emma Alberici stated during an episode of the clearly inappropriately named “Matter of Fact” hosted by Stan Grant, that “anyone can set themselves up as a mortgage broker, even a gym owner”.

Finance Brokers Association of Australia (FBAA) executive director Peter White, who at the time called on the ABC to “publicly correct the record and apologise”, says the comments were clearly wrong and that Ms Alberici confused a bank’s “introducer program” with professional mortgage brokers.

The ABC on June 1 finally issued a clarification on a section of their website that few would even be aware of, as follows:

“Matter of Fact with Stan Grant: On 13 March, a discussion about the day’s events at the Financial Services Royal Commission included incorrect references to mortgage brokers.  The ABC acknowledges that there is a regulatory scheme that applies to mortgage brokers and that ASIC has set minimum education requirements for brokers who provide third-party home loan credit assistance.”

However Mr White said this so called correction “on an obscure webpage that no one will read”, is an affront to thousands of small business owners who are finance brokers and provide a highly professional service under a strict regulatory environment.

“How such a high profile journalist can get away with such blatant misrepresentation of the facts and not be held to more account is outrageous,” he said.

“Emma Alberici should not only be forced to make a public apology herself, but the ABC should be doing a story on the fact that 54 per cent of Australians trust brokers more than the banks to provide them with the best mortgage advice.

“This journalist is a regular user of social media but failed to even post an apology, and the ABC should care far more that they got something so simple so wrong.”

He said the role of the media was to report the facts and not commentate on areas they know nothing about.

“The FBAA will not stay silent when the media provide information that is wrong, and we will keep working to build on the confidence the public already has in our sector.”

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Over 1000 to gather for FBAA 2018 conference

The Finance Brokers Association of Australia’s (FBAA) conference has not only cemented itself as the largest annual finance industry event in the nation, but the gala dinner also makes it the most glamorous!

Held at Sea World on the Gold Coast on Friday November 16, it will be followed by the dinner which will incorporate the ‘Awards of Supremacy’ recognising broker achievements, and then – for those still with energy – the Firstmac after party.

FBAA executive director Peter White says the conference will benefit all who attend, not only due to the inspiring speakers, but from the opportunity to network with other industry professionals from across Australia.

“This year’s theme is ‘evolution’, and without sounding like a cliché, I think we can accurately say that we are at a time of great change, and the industry must evolve if we are to grow stronger,” Mr White explained.

The conference will focus on changes to the industry in many areas including technology, consumer behaviour, and – in the shadow of the banking royal commission – regulation.

A representative from ASIC will provide an update, and industry heads will take part in a panel to answer questions on where the industry is headed beyond the royal commission.

However Mr White said it’s far more than a talkfest, but also “an amazing weekend away”.

“Last year we had over 180 families come and enjoy Sea World, and we offer child care facilities during the gala dinner, so it really is something for the entire family.

“And don’t think of the gala dinner as being remotely similar to anything you’ve experienced before; it’s a dinner with entertainment like no other where we hire the entire Movie World theme park,” he added.

The FBAA conference is free to members but Mr White has encouraged all to attend.

“This is a conference for all industry professionals, and is attended by many who are not FBAA members.

“It really has become an event you can’t miss, and those who do regret it.”

More information can be found at  https://www.fbaa.com.au/2018-national-industry-conference.

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Budget should boost confidence and property – Finance brokers peak body

The peak body representing Australia’s finance brokers believes the federal budget will help the property market through increased consumer confidence, while also acknowledging it did not address housing affordability directly.

“What helps the housing market, associated industries and the economy overall, is confidence around interest rates and superannuation and a little extra money in people’s pockets,” said Finance Brokers Association of Australia (FBAA) executive director Peter White.

He pointed to removing some of the tiering tax brackets in coming years, tax cuts, superannuation changes and infrastructure spending as positive measures.

“Any budget that provides hope in both the economy and the nation’s direction, and doesn’t create fear, can only be positive for our industry, because people are willing to spend and invest.

“When people are buying property, the entire economy from large to small business, benefits.”

Mr White also said the tightening of phoenixing laws and crackdown on cash economies are also good measures.

“It’s clearly an election budget, but also one that will likely make people feel secure.”

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Finance brokers call for perspective on broker remuneration

The Finance Brokers Association (FBAA) of Australia has labelled the current commentary around the broking sector and the number of inquiries unprecedented, unnecessary and crazy.

FBAA executive director Peter White says the reaction of some journalists and other ill-informed commentators is disproportionate to the issue and that the Productivity Commission, ACCC and Royal Commission are falling over each other in their quest for profile, while ASIC only recently conducted a comprehensive review which is with the minister.

“I have never seen such craziness around our sector, and this is leading to reactionary comments rather than considered approaches,” he said.

Mr White said the industry has been undergoing a process of reform directly with the regulators for the past couple of years, all with the aim of better consumer outcomes.

“There is not really a problem, but these multiple inquiries and statutory bodies have to justify their existence and fat pay packets by kicking someone, and at the moment it’s finance brokers.

“Let’s keep in mind that consumers are not complaining; we know they are happy with the current system because they are voting with their feet and overwhelmingly choosing brokers.”

He said ASIC’s own reviews indicated that a flat fee structure replacing broker commissions would present an entirely new set of problems.

“Unfortunately, with all these voices being driven by self-interest, it’s easy to think something needs to change or be fixed when it doesn’t.

According to Mr White, brokers should also avoid reacting to quotes attributed to banking bosses in news reports, because it’s easy to edit part of a comment and use it out of context.

“While the sound bites from the banks have raised some eyebrows, their submissions except for one bank to the royal commission indicate support for the current system, which isn’t surprising because it’s better for banks, brokers and borrowers.”

He said he hopes there will now be less speculative reporting, because the industry needs a more rational and informed discussion.

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Finance brokers slam “hysterical and misinformed” royal commission reporting

The peak body representing Australia’s finance brokers says some of the commentary around brokers from the banking royal commission is not only sensational and misleading but seeks to disparage an entire industry made up of predominantly small business owners.

The executive director of the Finance Brokers Association of Australia, Peter White, said some of the reporting displays a lack of understanding of the sector.

“Journalists have confused terms like ‘introducers’, which is a program run by some banks, with finance brokers, who are industry professionals.

“We had the ABC’s Emma Alberici incorrectly state on national TV that a gym owner can set themselves up as a mortgage broker, implying that no training or qualifications are necessary, which is ridiculous.

“We’ve had an article by an economics writer calling for mortgage broker commissions to be scrapped and part of the stated reason was remuneration that the industry has already eliminated.”

Mr White said mortgage brokers were qualified, new brokers received years of mentoring and all brokers undergo ongoing development for their entire career.

He said it is ignorant for anyone to imply that a few people who do the wrong thing represent an entire industry, or that brokers are not professional and skilled.

“Finance brokers ensure the loans are not unsuitable for their clients, can access a wide choice of products, provide expertise, offer experience and give excellent service.

“Our industry is offering consumers what they don’t receive at the banks.

“Consumers are not paying more or disadvantaged by using a broker, but on the contrary enjoy an advantage over direct bank customers.

He said that like in any industry there are a very small minority of people who act improperly, but, “the fact that we see those brokers losing their legal right to practise is a sign of strict regulation that works.

“That a high percentage of Australians use brokers shows the level of confidence and trust consumers have in our industry.”

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ABC and Emma Alberici get it very wrong on mortgage brokers

The Finance Brokers Association of Australia (FBAA) has accused the ABC and its controversial chief economic reporter Emma Alberici – who was recently criticised by business groups and the Prime Minister over comments about corporate tax – of misrepresenting the qualifications of finance brokers, saying she owes the thousands of hard working brokers across the country an apology.

During an episode of the clearly inappropriately named “Matter of Fact” hosted by Stan Grant, Alberici claimed that “anyone can set themselves up as a mortgage broker, even a gym owner”, as she confused a bank’s “introducer program” with professional mortgage brokers.

FBAA executive director Peter White said finance brokers work within a very strict regulatory environment and all brokers must have at least a Cert IV in Financial Services (Finance and Mortgage broking), though many have higher degrees, be mentored for two years and continue ongoing training.

“Entry into this industry could be described in a way like a traineeship, where brokers receive a combination of theory and formal training, plus guidance and on-the-job training, as well as ongoing development for their entire career.

“As those within the industry are aware, training never stops, and in fact is mandatory for brokers to meet their regulatory and association requirements.”

He said the banking royal commission has focused on some introducers and brokers in its first few days, but it is ignorant and unprofessional for any journalist to imply that a few people who do the wrong thing represent the entire broking sector, or that the industry is not professional and skilled.

“The media must be careful how they report from the commission, and the FBAA will not stand by and allow finance brokers to be misrepresented.

“Unfortunately like in any industry there are a very small minority of people who do the wrong thing, but the fact that we see brokers losing their legal right to practise is a sign of regulation that works.

“It’s a sign that people should have confidence in the broking sector.”

Mr White said the ABC should publicly correct the record and apologise.

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