In late September, the federal government proposed plans to scrap 100 pages of regulation to relax responsible lending obligations and enable credit to move about the economy more freely. Both broker industry associations were quick to welcome the news, while others expressed reservations regarding the impact of the proposed changes and theorised how the reform may interact with BID. The government released draft legislation on 4 November which was open for consultation until 20 November 2020. ASIC has made clear its guidance relating to the current responsible lending obligations will be reviewed and updated once the proposed reforms have been finalised.
In mid November, Loan Market announced it had bought NAB-owned aggregation groups PLAN Australia, Choice and FAST. While it was immediately made clear the four businesses will continue to run independently from one another, the aim is that the purchase will allow Loan Market to more deeply invest in technology and help all four groups to scale. According to FBAA managing director Peter White AM, the acquisition is “good for [the] industry” as he believes it will contribute to the mortgage broking sector’s future growth and expansion.
The four major banks were the first to go public with the range of support measures made available to Australians struggling in the wake of the pandemic, with one of the most discussed features of the aid the home loan repayment pauses. Readers' questions came pouring in: Would borrowers’ credit be affected? Wouldn’t they ultimately pay more interest over the life of their loan? What would happen when the pause was lifted? Wouldn't all borrowers immediately flounder? Might the window of grace be extended?
As the bigger questions swirled, smaller lenders also began to get their support measures in place. At the peak of the pandemic, over 900,000 loans were deferred. The government also sprang to action to support the banks’ efforts, on both a state and federal level, releasing scheme after scheme intended to help buoy small businesses, struggling borrowers and the housing market as a whole, just to name a few.
Readers were eager for more info upon hearing the first reports New South Wales was seriously considering stamp duty reform in May, as the full impact of COVID-19 was felt across the Australian economy. They were in for a bit of a wait, as six months elapsed before the state handed down its budget mid-November – a budget which proposed replacing the upfront stamp duty model with a smaller annual land tax. Shortly after, Victoria announced it will be temporarily providing a 50% stamp duty discount for the purchase of new homes valued up to $1m and a 25% discount for those buying existing homes up to the same value. Given what felt like growing momentum, readers were disappointed when it became clear Queensland wasn’t eager to jump on the stamp duty reform bandwagon.
All eyes were on the official cash rate this year. In February 2020, the Reserve Bank of Australia (RBA) kicked things off by keeping the rate on hold at what was then the record low of 0.75%, where it had rested since October 2019. At the scheduled March meeting, growing concern over COVID-19 saw the RBA send the rate yet lower to 0.50%. Then, in an unprecedented move, the RBA board gathered at an emergency meeting just two weeks later where it was decided to cut the rate down to 0.25% – a value the central bank communicated was the lowest it was willing to go. Despite this, faint rumblings started up in September, with a growing segment of the market predicting the official cash rate would be taken yet lower following the announcement Australia had entered a recession. In November, the seemingly impossible came to pass; the RBA brought the cash rate down from 0.25% to the new record low of 0.10% where it sits now, as 2020 comes to a close.
