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BIG FOUR INTENTIONALLY MUDDY MORTGAGE PROCESS The ACCC Home Loan Price Inquiry interim report has found that a “lack of price transparency” by the banks makes it hard for consumers to compare different mortgage products and switch to a loan that better meets their needs – something the brokers in our comments section wholeheartedly agree with. At the end of September, customers with new owneroccupier loans with principal and interest repayments were paying, on average, 26 basis points less than customers with existing loans; the difference grows even wider for customers with older loans. Frustratingly, the report also found that headline rates did not accurately reflect the price most customers actually paid for their home loans, as the “overwhelming majority” received discounts, including “opaque” discretionary discounts. Thanks for stating the bleeding obvious, ACCC; however, what this report misses is the obvious skill that a good broker possesses and the process that we go through to navigate our way through this deliberately designed mess in our client’s best interests – yes, best interests – to find them a competitive deal, taking all the moving parts into consideration. The easy solution to this deceptive and misleading pricing is to ensure that the tools of deception known as pricing calculators are banned outright. All lenders outside of the majors and their subsidiaries advertise their rates on their websites; what you see is what you get and that should be an industry standard.
MAJOR TO REFUND INTEREST ON DEFERRED REPAYMENTS CBA has announced that it will make payments to offset the interest costs that will accrue for customers who have been granted a six-month deferral on their home loan repayments due to the COVID-19 pandemic. On an average loan of $350,000, CBA will refund approximately $45 to offset the effect of “interest on interest over the six-month period”, the bank said.
Broker
Yes, we knew this. That’s why it is so important that unlike Labor, the government and organisations like Choice (magazine) don’t try to remove the filter known as brokers, who clear the waters for consumers and make the process transparent. We give you better water. Steve
24
Let’s be serious, lenders! What percentage of Australian mortgage holders are not going to be affected by COVID 19? For those that aren’t: great business as usual. For those that are: capitalise interest (user pays more). Sorry, banks make more! If lenders are serious about assisting Australians ... take the New Zealand approach. Absorb some of the billions in profit for six months! After all, everyone is suffering here in one way or another.
Finally the ACCC realises that the pricing of mortgage products is not as simple as they first thought and is impossible to navigate without the assistance of a reputable and experienced mortgage broker with the aid of sophisticated aggregator software. Wait until the ACCC tries to match the preferred rate and product with the plethora of lending policies of the vast number of lenders... and the varied processing times... and the varied credit histories of the borrowers... and detailed assessment of the borrowers’ living expenses... Good luck, ACCC!
Ben
Ray
Bianca
The interest on interest is not just for the six months. Won’t the interest on interest be applicable for the remaining term of the loan and be more than $45 on a $350k loan? Andrew
@Andrew, I think because the credit offsets the additional interest immediately, it is no longer applicable to the remainder of the loan.
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11/05/2020 2:19:22 PM