What The Royal Commission Means For You

Whether you’re a borrower with a big bank or a small credit union, or looking to get into the market, the Royal Commission proposals will affect you negatively.

Your action is very much needed to protect your interests as a borrower.

There’s a clever subterfuge in play at the moment. What the banks and some politicians would like you to believe is that the only people impacted negatively will be mortgage brokers. This sounds plausible but couldn’t be further from the truth.

Unfortunately the real losers will be every borrower and prospective borrower in Australia. That means you, your kids, your family and friends.

If you’re short on time, but already know you want to do something, please scroll straight to the bottom of this blog for how you can help (it won’t take more than 5 minutes of your time).

I’ve tried not to write ‘War and Peace’ here, but there is so much to share as the issues are deep and complex. Here  are a couple of points that I hope will encourage you to join the fight to stop this madness from becoming law. If you want more detail and background, I’ll be posting some more detailed articles on my blog Finance Straight Talk  and on social media in the coming days.

Here are the ugly bits:

  • The ultimate proposal is that not only do the banks stop paying mortgage brokers for the service that is currently free to you, Commissioner Hayne is suggesting that these be replaced by a fee paid by you. He’s also recommended that the banks also charge you an equivalent fee if you go direct “to protect competition”.
  • A current homeowner with a loan of $400 000 could end up being gouged an extra 1 to 1.2% on their rate before it becomes economically viable to refinance. That’s $4 400 a year!
  • If you are able to refinance to a lower rate, the cost of doing so would go from $950 to somewhere between $4 000 to $5 000. Even worse, if you don’t have the cash to pay the fees and have to add them to the loan (assuming you have the equity to do this),  you’ll end up paying the bank an extra $8 000 to $ 9 000 in interest over the loan term.
  • first homebuyer will need to save an extra $3 000 to $4 000 before they can get into the market. If they don’t have this cash and, assuming lenders mortgage insurers allow this fee to be added to the loan, the pain isn’t over. This would mean approximately $1 200 more in Lender’s mortgage insurance premiums, plus extra interest of around $10 000 for the life of the loan on the fees and the extra LMI premium. That’s puts a young homebuyer $14 000 out of pocket and the mortgage insurers and banks pocketing the extra profits.

In each scenario above the bank wins and the consumer loses, by thousands of dollars.

If you believe in the benefits of having a broker work for your interests and not the banks, and you want to keep your interest and borrowing costs to a minimum, then please take action:

There are a few simple things you can do.

    1. Please visit https://www.brokerbehindyou.com.au/
    2. Sign the formal industry petition. We’re aiming for 1 million signatures so that whichever side of government is legislating, they can’t ignore these issues.
    3. Email your local member – there is an easy tool that will help you select your MP and will prepare a pre-drafted email (which you can edit if you chose) and allow you to email it direct from the site.
    4. Sign the public petition at  https://www.change.org/p/federal-treasurer-josh-frydenberg-save-the-mortgage-broking-industry?

If you’d like to read about more about all of this, keep an eye on my Facebook Page and LinkedIn over the coming days.

I intend to stay in this fight, because I love what I do. Helping you, my clients, protecting you from the banks and seeing you flourish financially is my passion.

I’m adaptable and will do everything I can to restructure my business to weather whatever changes eventuate. I know that now more than ever borrowers need someone in their corner. I hate the idea though that this should be at a cost to you. And it doesn’t have to be, but I need your support to fight to protect us all.

For now, it is absolutely business as usual. Thank you for your support in this fight for all our interests.

Warm regards