Four questions about mortgages the ACCC inquiry should put to the big four banks

/ LOANSCAPE/
Four questions about mortgages the ACCC inquiry should put to the big four banks

The Australian Competition and Consumer Commission conducted an inquiry into mortgage pricing as recently as last year.

Now Treasurer Josh Frydenberg has asked it to do another, broader one, in order to ensure the banks’ pricing practices are “better understood”, and perhaps also to concentrate their minds on the wisdom of fully passing on the next collection of rate cuts.

There’s a lot to better understand.

Read More

Have the lending floodgates really opened?

/ Loanscape/
Have the lending floodgates really opened?

n June the Australian Prudential and Regulation Authority (APRA) announced its first relaxation of credit controls imposed on the banks since its imposition of much tighter controls in 2017. These had been imposed to wind back a ramp in lending to property investors, to put a ceiling on interest-only lending, and to force the banks to more thoroughly consider individual borrower’s living expenses.

From APRA’s perspective, this has had the intended effect on the property market. The rampant growth in capital city property prices was controlled, and risks to the financial system implicit in highly geared investors, and even owner-occupiers holding interest-only loans in a property market “bubble”.

Read More

Understanding fixed and variable interest rates

/ LOANSCAPE/
Understanding fixed and variable interest rates

Choosing which loan structure is best for you depends on your personal situation, possible changes in income or expenses, and your short term expectations with your property. Your overriding approach should be to understand that fixed interest rates are a risk management tool; they are not necessarily a way to save money. Do not try to second guess the interest rate market. My rule of thumb is that 80% of the time lenders will end up ahead on any fixed rate loan contract, simply because they understand money markets much better than their customers.

Read More

Are Trailing Commissions Money for Nothing?

/ LOANSCAPE/
Are Trailing Commissions Money for Nothing?

In what has been described as “an opportunistic attempt to to reduce competition in the Australian mortgage market”, CBA CEO Matt Comyn has disingenuously led the Royal Commission Into Financial Services Industry to form the view that Mortgage Brokers are paid trailing commissions, but not required to do any work to receive them.

Read More

Through a Different Lens

/ LOANSCAPE/
Through a Different Lens

The peak body for Mortgage Brokers, the MFAA has issued a strong defence of the current lending industry structure following bad publicity emanating from the Royal Commission into the banking sector. Whilst nearly all of the bad behaviour exposed by the Commission has fallen directly at the feet of the banks, some of the major banks have tried to use the commission as an opportunity to wrest back control of the lending market.

Read More