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While financial assistance pours in for residents impacted by the flood emergency, managing director of FBAA is urging brokers to “give a hand” to those in need.
The federal government has announced financial disaster assistance, of up to $1,000, for those impacted by major flooding across South-East Queensland, as major flooding continues in south east QLD and the NSW North Coast.
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The unprecedented weather event has affected approximately 14,000 people across Lismore and surrounding regions, with the Wilsons River rising to 14.36 metres on Monday (28 February) afternoon, two metres higher than its previous peak set in 1954.
While flood waters in Brisbane peaked 3.85m on Monday (below the 4.46 reached in 2011), managing director of Finance Brokers Association of Australia Peter White, who lives along the river, is watching with bated breath.
“The waters won’t recede for days, we can see [today] and [tomorrow] we’ll have higher tides, and they’re still releasing water from the dams,” Mr White said.
“Once that starts to recede, people will be trying to sort out the issues around their homes.”
He said it’s going to be a “big cleanup” and encouraged people to come forward and “give a hand” if it was safe to do so.
“That practical help is something Queenslanders are renowned for... but if you’re out there helping, it’s a goodwill gesture, [and] you get to talk to people,” Mr White said.
“You might be able to help them out further with their financial insurances or [similar], once they get everything sorted.
“Be there to be helpful and be a mate, that’s what’s important in these times.”
Mr White said brokers can “shoot a message” to clients and let them know you’re here and how you can help.
“See what you can do to help whether they need a refinance structure, whether there’s a package that’s available through the banks or the other lenders that helps them through disaster recovery and so on,” Mr White said.
Big four banks offer support
As the flooding situation unfolds, the major banks have all announced financial support is on offer to support customers.
For instance some people, impacted by the recent floods, may be able to defer their repayments on home loans or credit cards, have fees and charges waived, plus other incentives.
While deferred payments can be helpful in the short-term, mortgage broker Dayna Hill said there are risks involved.
Speaking to The Adviser, Ms Hill from Loan Market said at the start of the pandemic some people who accessed similar deferred payment schemes were caught out with higher mortgage repayments at a later date, or their ability to borrow further funds or refinance was "hindered" for a period of time.
“When the bank said defer your payments because of... hardship, the banks would then compound the payments on top of the mortgage. And when they went to restart their payments, they would have a higher mortgage,” Ms Hill said.
Ms Hill said lending capacity can be compromised as a result of deferring payments.
“Some people wanted to get extra money, to do a renovation or refinance and other banks weren't accepting them because they had what the other banks would see as a result of deferred payments or a period in time where their finance position had been compromised,” Ms Hill said.
So a lot of people weren’t given that information upfront by the banks.
Clients need to be “really clear” on their reason before going ahead, she said.
As Australia grapples with frequent natural disasters, people are becoming more prepared for financial hardship ahead of settlement.
“Most of my clients when they’re going through the application process... We teach them to use a redraw or an offset or just have a savings account and grow that savings account,” Ms Hill said.
“So it might only start with a couple of grand, but the idea is to get it to between $20,000 - 40,000 for exactly these purposes, so that you’ve got a nest egg.
“A lot of my investor clients and mums and dads and even first home buyers, did heed that advice.
“I’m pretty passionate when I do tell them, you never know what’s around the corner, and cash is king. So always have a little nest egg there.”
[Related: Federal government offers grants, as ‘flooding disaster’ escalates]
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