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ASIC commissioner Sean Hughes gave additional context to the much-discussed report the regulator released which questioned the service provided by mortgage brokers, and the impact it had on the consumers they aimed to help.
“We’re not a black letter regulator," he said.
"[Imposing a minimum number of options brokers must present to their customers] wouldn’t take into consideration the availability of credit in the market for that particular borrower, or the circumstances of that borrower in terms of their repayment capability and the security they’re offering and their history.
“But what is clear from this report, is that consumers are disappointed. There were quite a few stories where people thought they were going to be getting something better than they ultimately did.”
The industry questioned Hughes' grasp on how brokers operate, with one commentator asking, "Does he even understand what we do??"
Readers were eager for the details of the government’s First Home Loan Deposit Scheme, intended to help Australians enter the property market sooner by providing 10,000 eligible Australians per year access to a home loan with a deposit of as little as 5%.
The legislation outlined the income tests to assess first home buyer eligibility in the program, as well as modest dwelling price limits.
It also explained the National Housing Finance and Investment Corporation (NHFIC) will contract with a panel of lenders rather than ever having direct contact with borrowers. As such, lenders or mortgage brokers will assess scheme eligibility alongside the normal considerations of seeing a borrower through the loan process, such as loan serviceability tests.
While some have questioned the impact of the scheme and raised concerns over the unrealistic limitations imposed by the price caps, others feel optimistic the initiative will indeed help more Australians into home ownership.
The list of 27 lenders participating in the first round of the scheme can be found here.
In May, the industry was abuzz upon a new mortgage product being offered at a variable rate of 3.29% (3.34% comparison). Funded by Mortgage House and launched with uno Home Loans, the product was the lowest on the market by 10 basis points at the time. However, just months later in October, mortgages were falling beneath the 3.0% mark across a wide range of lenders. By December, there were 330 owner occupied home loans with an interest rate below 3% listed on Canstar, reminding all just how quickly things can change.
No one in the industry will soon forget the day the royal commission final report was released to the public. It outlined Commissioner Hayne’s recommendations, confirming that a change to broker commissions was being encouraged, with a flat fee for service to be paid by the borrower. The industry united in an unprecedented manner and mobilised in a huge way, resulting in a dramatic about face on the future of trail commissions, as well as a definitive movement away from saddling borrowers with any costs for service. The remaining ten months of 2019 saw the industry continue to interact with policymakers at the highest levels and present a united front in the interest of preserving a sustainable future for mortgage brokers.
In early July, the regulator finalised the proposed changes to the serviceability assessments lenders were expected to perform on residential mortgage applications, no longer asking them to assess eligibility using a minimum interest rate of at least 7%. The move was intended to combat the credit squeeze affliciting the Australian market, and make home loans more accessible to deserving borrowers. In the coming weeks, lenders both large and small adjusted their policies to reflect the shift; a variety of economists and housing market commentators have partially attributed the housing rebound which gained steam in late 2019 to APRA's amended guidance.
