The heads of the FBAA and MFAA have both tentatively welcomed the final report on the Home Loan Price Inquiry, particularly noting the recommendations to improve the process and speed in which discharges are made.
On Saturday (5 December), the government released the Australian Competition and Consumer Commission’s (ACCC) Home Loan Price Inquiry final report, which examines how the home loan market works and potential improvements that could be made.
Building on the interim report released earlier this year, the final report (released on Saturday, 5 December) found that a lack of price transparency and higher interest rates for existing loans continued to persevere in the lending landscape and that the difficulty in changing loans were preventing borrowers from doing so.
As such, the ACCC has recommended four changes that could make mortgage pricing more transparent and reduce barriers to switching. These are:
While government has said that it will “consider the report and respond in due course”, the heads of the broker associations have tentatively welcomed the report and its findings.
Speaking to The Adviser, the managing director of the Finance Brokers Association of Australia (FBAA), Peter White, commented: “We support the ACCC report findings to make banks more proactive with existing borrower interest rates. This ensures banks are more transparent as to what existing borrowers pay and what they are proposing for a lure to new borrowers.
“But we must remember that brokers are already doing annual reviews, and it should also be noted that brokers are held to a best interests duty while banks are not,” he said.
Mr White added that the FBAA has been publicly calling for standardised authorities, such as discharges.
“This is a very simple yet important evolution and ensures fluidity in the system together with [an] SLA time frame of 10 days.
“As we have said time and time again, there is no justification for these to be delayed any further,” he said.
“In terms of monitoring of competition and prices in the home loan sector, I feel this is something the ACCC should already be doing. Hopefully, this will bring greater transparency to the market,” the FBAA MD continued.
“It is also very pleasing to see the report acknowledge the ‘professional’ role brokers play. It infers brokers do all they can and that lenders now need to lift their game,” Mr White concluded.
Likewise, the CEO of the Mortgage & Finance Association of Australia (MFAA), Mike Felton, said that he particularly welcomed the moves around making discharges clearer and more swift.
He told The Adviser: “The MFAA consulted with the ACCC in their investigations and preparation of this report, and we are pleased to see that our concerns on discharges have been noted and that there are recommendations to make the process faster and easier with a greater degree of standardisation.
“Improvements to the discharge process coupled with proposed consumer credit reforms that will place greater emphasis on individual circumstances and borrower information should assist to further reduce impediments to refinancing, result in faster overall turnaround times and improve access to appropriately priced credit,” Mr Felton said.
He continued: “With an unrivalled best interests duty commencing on 1 January 2021, mortgage brokers will be uniquely placed to assist the remaining 40 per cent of consumers who are yet to use a broker in assessing whether their loans are appropriately priced and to help them navigate the refinancing process and any remaining challenges it may present.”
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.
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