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The mortgage industry faces great change in a post-pandemic world. The federal government has introduced stimulus policies, and there’s a new regulatory environment. Clive Kirkpatrick, of new brokerage Award HomeLoans, asks if brokers are well prepared for change.
There is no doubt that the COVID-19 outbreak has had an unprecedented impact, but the Australian economy is already showing signs of early recovery. ANZ-Roy Morgan’s latest report shows that the Consumer Confidence Index is currently at its highest level since mid-March when the pandemic struck. The unemployment rate is also lower than forecast, and job advertisements continue to surge for the fifth month in a row.
The mortgage industry has seen some interesting effects brought about by the pandemic. A recent CoreLogic report shows that house prices in Sydney have increased substantially in the last quarter. Additionally, anecdotal evidence shows properties sitting on the edge of or outside metropolitan areas have experienced significant growth. This may be a result of people moving out of the city, or looking to move out, due to more flexible working arrangements such as working from home.
The federal government has implemented several assistance programs during this year’s tough economic situation. COVID-19 initiatives such as JobKeeper and JobSeeker have helped people through the core of the pandemic, with some of this money being moved into savings.
Additionally, the tax cuts announced in the recent federal budget and backdated to 1 July 2020 have contributed to more cash in the pockets of Australians. The government has also introduced the HomeBuilder program, which offers a grant of $25,000, with a few qualifying criteria, to people who are planning to either develop a property or build a new property.
The Reserve Bank of Australia has also dropped the cash rate again, from 0.25% to an all-time low of 0.10%. This will further reduce borrowing costs.
The NSW government has provided several first home buyer assistance schemes to encourage growth in the market. A $10,000 grant is available to all first-time buyers. Stamp duty is also waived for new properties worth up to $800,000, with reductions for those up to $1m.
More small businesses have received assistance as well. Owners of businesses with an aggregate turnover of less than $500m can now claim for assets purchased for use in their businesses, such as motor vehicles, trucks, trailers, tools and fit-outs, under the instant asset write-off. This provides greater opportunities for brokers in equipment finance.
All these incentives are designed to help stimulate the economy by making borrowing a little easier and encouraging an increase in investment. Through these initiatives, Australians can fund their first home or investment property more easily.
BID will put brokers in an even better position when it comes to helping their customers, and will be a big boost to growth in their market share
Best interest duty regulations start on 1 January 2021. BID will put brokers in an even better position when it comes to helping customers, and will be a big boost to growth in their market share. A broker can tell customers that they are legally bound to have their best interest as the prime goal, but if that customer goes to a bank they do not have the same protection.
This opens up even more opportunities for brokers to help more customers with their broader financial needs.
Award HomeLoans expands the broker opportunity further. It leverages off the success of the Award Mortgage business and its infrastructure. What is unique about Award HomeLoans is that it has invested quite heavily in back-office facilities, and these will enable brokers to spend more time with their customers to determine what is in their best interests. We have never had an operational disruption to back-office support, which enables all brokers to service our customers on a seven-days-a-week basis. With this infrastructure, we are confident we can adapt to all regulatory changes, such as BID when it comes into force in January.
Apart from that, brokers will be supported from day one, being introduced to a well-structured onboarding and continuous training program provided by Award HomeLoans, lenders, aggregators and other professional bodies.
Importantly for brokers, there is a solid and active referral system, including cooperation with developers and real estate agents who can supply quality leads for Award brokers.
The Award HomeLoans proposition allows the broker to invest in their own business, employ a team to grow the business, and leverage the strong infrastructure that has been created. This would be a wonderful opportunity for brokers working for other brokers, or bank loan writers looking for the next step.
In summary, a number of government initiatives have been announced that provide more opportunities for Australians and encourage them to start investing in the real estate market or their businesses. This is an opportune time for people to start seriously thinking about how they can take advantage of such schemes to create a more financially stable future for themselves and to help rebuild the Australian economy.
Clive Kirkpatrick
CEO,
Award HomeLoans
