Complaints about brokers less than 0.5%

Approximately 29 complaints received by the Australian Financial Complaints Authority (AFCA) were directly aimed at mortgage brokers.

The new external dispute resolution scheme announced earlier this month it had received 6,522 complaints in its first month of operation.

Averaging about 310 complaints a day from consumers and small businesses about financial products or services, it received 47% more complaints than the three predecessors.

The banks received the greatest number of complaints with 2,367, followed by general insurers with 1,159 complaints and credit providers with 1,040 complaints.

Australian Broker reached out to AFCA to determine the number of complaints received regarding mortgage brokers.

A spokesperson from the group said, “In November 2018, AFCA’s first month of operations, we received 29 complaints against mortgage brokers, out of a total of 6,522 complaints received.

“Please note that complaints that have been more recently received in November might not have the industry or financial firm recorded, so these statistics might change.”

Commenting on the figures, MFAA CEO Mike Felton said, “It is pleasing to see complaints relating to mortgage brokers remain at remarkably low levels. At just 29 out of 6,522 grievances being logged by AFCA in its first month of operation, broker related complaints represented less than half of one percent of the overall figure.”

He added, “While this is a positive story for brokers, it is not a new story and brokers have for years had strong satisfaction ratings. Consumers’ Net Promoter Score of brokers is for example in excess of 70 as compared to an average score for the big four banks ranging from zero to minus 15.”

According to Felton, if conflicted remuneration was causing “systemic harm to consumers”, the new complaints figures from AFCA would be “high and rising”, along with relative arrears. In addition, he said that competition and consumer support would be shrinking and net interest margins “inevitably rising”.

“But this is not the case,” he said.

“The truth is brokers are focused on their customers’ needs, and on giving them choice, convenience and access to credit. That’s why broker share of the home lending market is now more than 55% and growing,” Felton continued.

 

Broker News by Rebecca Pike, 19 Dec 2018

Morrison’s gift to Shorten

I know Billy Slater, Bill Cosby, the demand to sack the ABC’s Emma Alberici and a radical recycling plan are ‘important’ news stories but I would’ve thought the fact that the country’s Budget Deficit is tumbling rates a decent headline.

The SMH’s website gave the story no prominence. The AFR gave it front page coverage but this was the headline: “Tax surge paves way for pre-election spend”, which has refused to say anything great about the achievement.

Now, don’t think I’m here rattling the can for Scott Morrison (yes, my old economics student). It’s not the case. I’m more rattling my own can, as I’ve been arguing that policies to create economic growth would create jobs, which in turn will boost tax collections while reducing government outlays on the unemployed.

When that happens, I’ve argued for a few years (here on Switzer Daily, on TV, on radio and in speeches I regularly do) that the deficit will fall. And the deficit and the way it feeds our public debt really worries a lot of people.

I saw Richo and Paul Murray stressing about it on Sky News only this week. They talked about how it blew out under Scott Morrison’s stewardship but they weren’t to know that in fact the deficit story was about to turn pretty positive for the new PM.

In case your favourite media outlet didn’t rate this Budget story, let me give it to you as interestingly as possible.

The headline should have been something like the one CommSec came up with: “Federal Budget: Smallest deficit in a decade.” However, the words “Federal Budget” could turn normal people off reading it.

I like “Australia’s debt disaster derailed! Put away the razor blades!” (Yeah, you have to fight mindless clickbait with mindful clickbait.)

Back to the actual story:

• The budget deficit for 2017/18 was guessed at in the May 2017 Budget at $29.4 billion.

• Only four months ago at the May 2018 Budget, the guess number was down to $18.2 billion.

• It is now $10.1 billion.

• The rolling annual deficit was the smallest in nine years – since the year to March 2009,  at $6,563 million.

• Government debt stood at $342 billion at the end of June 2018 (or 18.6% of GDP), $13 billion lower than estimated at the time of the 2017/18 budget.

This is a huge story for those worrying about our public debt, which is fed by the Government’s deficits and is reduced by surpluses. And the quicker we get to surplus, the better it will be for our economy to ensure that if another GFC comes along, the Government of the day can do what Kevin Rudd’s Labor did in 2008 when it threw money at the problem.

The Costello/Howard (plus mining boom-created) surpluses gave Labor the ammunition to fight the forces of recession and helped us keep unemployment under 6%, when the USA saw the jobless rate hit 10%!

Just like personal finance, great budgeting gives you the firepower to borrow money, seize opportunities and weather financial storms. The fact that our budget bottom line is on the big improve is something worth celebrating and even headlining!

I have to say The Australian newspaper’s David Uren captured the right message to pass on to fellow Aussies with his “Surplus in sight ahead of election”. That’s why the PM will probably wait until May 18 so he possibly could crow that the Budget is balanced or even into a small surplus.

I used the word “possibly” because the Oz economy has to keep growing as fast or well as it has recently, which was predicted by the Reserve Bank and that, I’ve always argued, was on the money.

This means we have to watch Donald Trump and what his trade war might mean for world growth and our growth. Also, if Donald’s trade battles lead to a stock market crash, that could ruin Scott’s remote re-election plans and at the same time upset our increasingly rosy-looking apple cart!

Bill Shorten could inherit a damn good economy on the mend and if Donald doesn’t rain disaster on the world economy and global stock markets, it could be a great election to win.

Certainly, the one trump card Scott Morrison will have to play at election time will be the economic and Budget story, but given how media outlets rate these good news stories in their headlines, a lot of Aussie voters won’t either give or toss or worst still, might not even be told about it.

Of course, Government politicians will talk but who listens to pollies on the hustings?

 

EDITORIAL BY PETER SWITZER – SWITZER DAILY

RBA CASH RATE UNCHANGED AT 1.50%

The Reserve Bank of Australia decided to once again leave the official cash rate unchanged at 1.5% with it now being two years since the last cash rate move. I’d like to share today’s rate announcement and the thoughts on why the Reserve Bank of Australia has made this decision.

With a combination of factors including very low wages growth, high underemployment, flattening property prices and home lending and modest inflation, many experts are predicting it may be some time before we see the next rate movement and it may actually be downwards.

Another emerging factor is lenders making ‘out of cycle’ rate increases. The term ‘out of cycle’ refers to lenders increasing rates independently of the Reserve Bank. Gone are the days when lenders relied almost entirely on customer deposits and domestic short-term borrowing, pegged against official RBA rates to fund loans. Most lenders now have much more complicated funding structures including accessing offshore wholesale and securitisation markets. Regulatory changes designed to strengthen the banking system have also seen the amount of capital lenders are required to hold increase, which means they have had to look to more expensive sources than their own balance sheets to fund loans.

We have seen around 20 lenders increase rates out of cycle recently so it is important to review your lending options regularly to ensure they remain the most suitable for your situation. There may be different rates available from our wide panel of lenders and I’m always available to ensure you have the right financial solution for your current and future circumstances.

If you’d like to have a chat about what today’s news means for you and your finances, please don’t hesitate to get in touch.

Kind Regards,
Lynne and Aron
Aussie Mortgage Masters

PH: 1300 666 186

 

Should you stress out about the biggest house price drop in 6.5 years?

The media’s obsessive love affair with telling horrific housing stories continues this morning and this time I blame economists, who had the temerity to tell the truth about the fastest fall in house prices in six and a half years! Yep, a fact like that deserves an exclamation point but in the pursuit of honesty and providing my fellow Australians with the facts of the matter, you need to look at what that drop really means.

Until the story was nearly two-thirds completed, the newspaper story I read left out what I’m going to tell you now. Maybe if the writer did what I’m going to do now, that is, reveal the facts, then maybe he wouldn’t have created the scare factor and then got a top headline for his yarn.

Take these facts in to hose down your property worries:

  • The actual fastest drop in house prices in six and a half years was, wait for it, 0.6%!
  • This demonstrates how many endless months we’ve had house prices rises for!
  • The predicted fall in house prices in Sydney and Melbourne is 10% over two years, which would be 5% per annum, which hardly looks like Nightmare on Elm Street.
  • House prices in Sydney and Melbourne have risen by varying amounts over the past five years. The story today says 45% but others have said 75%. However, if I found a $1 million home too expensive at auction last year, if the price falls by 5% to $950,000, I reckon I’d still find this price pretty challenging.

I could go on, but I think I’ve put these housing horrors into perspective. What worries me is that headlines like this, on top of the plans Labor has to nuke the property market for investors next year if it wins the federal election, could actually turn this property correction into something more scary.

In the financial markets, if a market falls 10%, we call it a correction, meaning price rises might have been a little too silly and needed to be corrected like a badly behaving child. A 20% slump is a crash and that’s what a lot of media headlines have been predicting for about two to three years, so the better headline for newspapers should be: “We exaggerated the property fall out! Sorry.”

I’m not expecting such a headline, however, they might not have to apologise if they keep putting out horror housing headlines and spooking consumers, who are now starting to look much more confident. And if Bill Shorten, as PM, goes with his negative gearing and capital gains changes that could end up being like Kevin Rudd’s mining tax (which was unwisely delivered as the mining boom was ending), then it could really hurt the economy and turn a 10% price fall over two years into a 20% (or more) collapse.

I don’t mind the media telling an accurate story that could have negative economic implications, especially by hurting confidence. But it’s when they exaggerate negative developments and implications of a 0.6% price fall, that really gets me cranky.

And maybe I’d be less reactionary if my media mates occasionally took positive economic stories and looked at the promising future ahead because of these optimism-creating developments.

Only this week, there was a good news economic story and that old journalistic chestnut was pulled out of the oven by journalists who were quoting an economist who had got his forecast on the subject wrong — “but it’s not expected to last.”

This is why I do what I do. When I turn negative, that’s when it will be time for you to panic. I hope that will be some years off.

For those who want to see the annual house price changes, see below. What you’ll notice is that half of the nation’s capitals are still seeing house price rises and even Melbourne has only had a minus 0.5% movement in prices over the year. Also, real estate experts think Perth’s on the comeback trail and will probably see price rises this year, and so might Darwin.

By Peter Switzer – Switzer Daily 3/8/2018

More banks increase rates

More banks have increased interest rates as the pressure of increased funding costs continues to mount.

Both Bendigo Bank and Teachers Mutual Bank Limited (TMBL) announced new rates yesterday. TMBL includes three banks: Teachers Mutual Bank, UniBank and Firefighters Mutual Bank.

While Bendigo has increased its variable interest rates for home owners, TMBL announced changes to its fixed rates for new customers to the group’s brands.

Bendigo has confirmed the changes are to absorb increasing funding costs.

Managing Director Marnie Baker said the changes reflect the increased cost of funding.

She said, “When setting interest rates our bank needs to consider many factors and carefully take into account the needs of our stakeholders including customers, shareholders, staff, partners and the broader community.

“Funding costs have been steadily increasing this year, and we’ve absorbed this cost impact to date. Today’s adjustment to the variable interest rates will assist in balancing this funding cost increase.

“We carefully balance the interests of our mortgage customers, those who earn money through deposits and those who invest in our Bank. We must ensure our pricing remains market competitive, provides the appropriate platform for sustainable growth and supports the hundreds of communities in which we operate.”

TMBL rates have increased on selected fixed rate home loan products.

The rates have been increased by 8, 9, and 9 basis points for 1, 2, and 3 year fixed rates respectively.

TMBL chief executive officer, Steve James, said, “These rate changes are the first increase in 12 months for fixed rates, and follow a decrease to our fixed rates last November.

“Any new members who join after these rate changes will still have access to a competitive market rate and great products, such as our 100% mortgage offset facility.”

Other banks to increase rates recently include AusWide, IMB, AMP, ING and Bank of Queensland.

Rate changes – Bendigo 
Variable interest rates across home loans and lines of credit will increase for owner occupiers and investors as follows:

–              Owner occupier principal and interest loans will increase by 0.10% pa;

–              Owner occupier interest only loans will increase by 0.16% pa;

–              Investment loans will increase by 0.10% pa;

–              Lines of credit will increase by 0.10% pa.

The interest rate changes announced are effective Monday 23 July.

Customers on a residential variable interest rate with a $250,000 loan will see their repayments increase by $15.71 a month (principal and interest home loan over 30 years).

Rate changes – TMBL
The changes will affect owner-occupier, principal & interest, 1, 2 and 3 year fixed rate home loans.

The new rates are as follows:

–              1 Year Fixed rate OO P&I – 3.87% p.a.

–              2 Year Fixed rate OO P&I – 3.78% p.a.

–              3 Year Fixed rate OO P&I – 3.88% p.a.

The new rates are effective from Monday, 16 July 2018.

by Rebecca Pike 17 Jul 2018 – AUSTRALIAN BROKER

 

 

CALL LYNNE OR ARON NOW ON 1300 666 186 TO ENSURE YOU GET THE RIGHT RATE!

Variable mortgage rates on the way up

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A number of lenders have announced increases to their variable mortgage rates over the past month, citing funding cost pressure as the reason for the changes.

According to the latest Mozo Banking Roundup, Auswide, Citibank, ING, Bank of Queensland, AMP Bank, Beyond Bank, QBank, Heritage and IMB put up rates last month.

Auswide Bank increased its owner-occupier variable rates by five basis points and its investor variable rates by 13 basis points.

Citibank and ING have increased variable rates by 10 bps. Beyond Bank and QBank added six bps to their variable rates. Heritage Bank raised rates on all loan types by five bps.

Bank of Queensland put up the rate on owner-occupier principal and interest loans by nine bps and put up the rate on all other loans by 15 bps.

AMP Bank has increased owner-occupier interest-only rates for new customers by 40 bps.

IMB took the unusual step of withdrawing its package loans from the market. It also added eight bps to owner-occupier and investor variable rates.

These changes follow mortgage rate increases by Suncorp, ME and MyState since March.

Rates on fixed interest loans also rose, with Westpac and its subsidiaries increasing some rates by up to 15 bps.

The lowest variable rate loan in the market is 3.39 per cent, which BIDeloan is offering on its SMARTeloan product.

The rate leaders in the fixed rate segment are Greater Bank, which is offering 3.49 per cent for one year; IMB Bank, offering 3.65 per cent for two years; Community First and easy Street – 3.69 per cent for three years; Freedom Lend and ING, with 3.92 per cent for four years; and ING, offering 3.98 per cent for five years.

Among the big banks, ANZ’s best package variable rate is 4.3 per cent, while it is offering 3.99 per cent on a three-year fixed rate package.

Commonwealth Bank is offering 4.52 per cent for a package variable rate mortgage and 3.99 per cent for three years fixed.

National Australia bank is offering 4.34 per cent for a package variable rate and 3.94 per cent for three years.

Westpac is offering 4.34 per cent for a package variable rate and 3.99 per cent for three years.

Rate City has estimated that as many as 362,800 home loan customers will have to make higher repayments from this month.

It says most of the increases have been in the variable rate segment, raising the prospect of a switch to fixed rates.

NB: Please call Aron or Lynne now on 1300 666 186 and lock your Home Loan interest rate in  to avoid the increases.

Interest rate update

The Reserve Bank of Australia decided to once again leave the official cash rate unchanged at 1.5% with the last rate move back in August 2016. I’d like to share today’s rate announcement and the thoughts on why the Reserve Bank of Australia has made this decision.

The economy appears delicately poised with slow wages growth, low inflation, a slowing housing market, tighter lending policies and high levels of household debt now leading some economists to believe that the next rate change could be down. Contrasting this, we have seen some lenders increase rates out of cycle, citing an increased cost of funds as the reason. Until the RBA sees a strong economic lead one way or the other it is highly likely to continue to leave rates as they are.

NOTE:

Rates remain constant now but it is important that you are prepared if the next rate announcement is an increase. There may be different rates available from our wide panel of lenders and I’m always available to ensure you have the right financial solution for your current and future circumstances.

If you would like to have a chat about what today’s news means for you and your finances, please don’t hesitate to get in touch with Lynne or Aron now on 1300 666 186

 

RBA CASH RATE UNCHANGED AT 1.50%

The Reserve Bank of Australia decided to once again leave the official cash rate unchanged at 1.5% with the last rate move back in August 2016. I’d like to share today’s rate announcement and the thoughts on why the Reserve Bank of Australia has made this decision.
With a combination of job growth slowing from last year’s frenetic pace and stagnant wage growth, the Reserve Bank have signalled that we can expect to see rates remain where they are for now. Many however still expect the next rate move to be an increase with signs of improvement in the economy in the shape of strong internal trade results and improving GDP numbers.

Rates remain constant now but it is important that you are prepared if the next rate is an increase. There may be different rates available from our wide panel of lenders and I’m always available to ensure you have the right financial solution for your current & future circumstances.
If you would like to have a chat about what today’s news means for you and your finances, please don’t hesitate to get in touch.

10 surprises from the Budget!

By Peter Switzer
Here are 10 surprises from the Budget that might not have had a lot of coverage.

First, the Treasurer talked about “open data” and the banks will be the first to be forced to have it. This will mean you’ll be able to ask the bank for all the info/data they have on you and you can preview it to make sure it’s right but you could use it to switch loans or even banks!

By the way, because our banks have a pretty complete picture of what we buy via our credit and debit cards, if you were say going to an oncologist for cancer they might know you could have trouble paying back your loan or your insurance policy could soon be expected to pay up. This info was explained to me by a director of one of our big banks!

Second, to crack down on the black economy, if a tradie gives you a discount for paying cash and the bill is over $10,000, then you’ll be in trouble as the payer if you pay in hard, cold cash! You will be in the firing line so it will become a gamble to pay in cash.

Third, young people will be able to say no to life insurance inside their super funds, which is often totally unnecessary and can eat into the growth of a super fund, when the pay levels aren’t high. Someone under 25 and with less than $6,000 in super can drop the life insurance option. Also, the maximum fee for someone with less than $6,000 in super will be 3%. Some people are charged as much as 9%!

Fourth, there’ll be no exit fees when you leave your super fund for a better one.

Fifth, a company like Trivago that sells us hotel rooms and other travel services will have to pay GST for a change, which will mean their hotel rates and other prices will go up.

Sixth, craft beer brewers will have a 40% tax reduction on small kegs, which will mean kegs will be rotated more quickly than if they were in bigger kegs so the beer will be fresher! However, it will be interesting if the brewers share the tax gain with us the consumers. I suspect not.

Seventh, the big digital disruptors might soon be forced to pay a revenue tax to make them pay some decent level of tax. There are two options on the table and we look like copying Europe, where it looks likely they will hit the big US tech companies with a special revenue tax.

Eighth, the ATO has been given an extra $260 million to crack down on taxpayers who exaggerate their tax-deductible expenses. And more debt collectors will be on the beat!

Ninth, full body x-ray scanners are coming to an airport near you, so you better get in shape or take the train!

And tenth, it’s time to start making films, with an extra $140 million made available for directors to make films here in Australia! I’m already writing the script for the Mad, Mad World of Money Down under!

Who will play Bondy, Skasey, Nathan Tinker and Clive Palmer?

This is a Voodoo Economics Budget and it will deliver magic!

By Peter Switzer 9/5/2018

A lot of normal, non-economically trained Aussies might think this is a Voodoo Economics Bugdet — the Treasurer cuts taxes, tax collections go up and down goes the Budget Deficit, like magic. But in fact, this is an acceptable piece of economic logic.

Sure, it’s an election Budget but, fortunately, the demands of the economy also match the needs of Malcolm Turnbull and his Government.

We all need economic growth and more jobs and this Budget will help deliver exactly that.

The purists out there, like my old UNSW colleague Dr. John Hewson, have called it “the mother of all political budgets” but it has history with politics and budgets.

Dr Hewson’s famous ‘Fightback!’ election polices, which featured a 15% GST, was so economic and so un-political that he lost the un-losable election to Paul Keating, who called that win the “sweetest victory of all!”

Usually I’d argue good politics is bad economics but, right now, this is both good politics and good economics.

We’re living in an odd economy where there are jobs (431,000 in a year) but we’re not growing fast enough (over 3%) and consumers aren’t spending enough because wages aren’t growing quickly enough.

Fortunately, business is hot to trot and really confident. We got this message from NAB’s respected business survey only yesterday. The business conditions index rose to a record high +21.1 points in April, up from an upwardly revised +15.4 points in March (previously +14.1 points). Meanwhile, the business confidence index rose to +10.1 points in April from an upwardly revised 8 points in March (previously +7.4 points).

And the mere talk of tax cuts led CommSec’s chief economist, Craig James to tell us this about the consumer: “Ahead of the budget, consumer sentiment is over nine per cent higher than at the same time last year,” he pointed out. “Clearly, talk of tax cuts is cheering Aussies, despite the knowledge that the actual cuts may be quite modest. Still, Aussies are no doubt happy that the budget situation is improving. On top of this, the share market has been lifting.”

Jobs have helped consumer sentiment.

This shows how consumer sentiment has trended up since jobs started falling out of the sky and right now, more economists are arguing wages are starting to rise more convincingly but the Reserve Bank wants to see more wage rises. And this Budget will help.

If the Budget helps to increase consumption and helps jobs creation, then the demand for workers tightens the job market and wages rise. Yep, it could give Malcolm Turnbull votes as well. However the more important goal is to create more jobs and higher wages and this will actually shrink the Budget Deficit faster than it would if Scott Morrison played a John Hewson game.

The time for a tough Budget will be after the next election, when the economy is growing at a rate over 3%. And that’s when the economy won’t need a helping hand from whovever is the Treasurer then.

I always test a Budget on whether I believe the forecasts and assumptions upon which the numbers are based. Here they are:

Forecasts

• Deficit $18.2B $14.5b

• Ec. Growth 2.75% 3%

• Unemployment 5.75% 5.5%

• Inflation 2% 2.25%

• Wages 2.5% 3%

And they’re all pretty well believable, though some economists would debate the growth guess and the wage rise number but I suspect they’ll be close to the mark.

This is the right political budget for a really unusual economic time!

Last year I called the Budget the “Beam it up Scotty Budget” and the Treasurer has been able to dial up growth and jobs, which explains why the Budget Deficit is shrinking at a faster than expected rate.

The tax cuts and other spending will give us the growth, which means more jobs and income, which gives the Government more tax collections and a smaller deficit. This is Voodoo Economics — tax cuts meaning more tax collected — explained!

Go Scotty!