Media Statements

The Finance Brokers Association of Australia (FBAA) has welcomed today’s decision by the Reserve Bank of Australia (RBA) to pause interest rates but says it must find a way to lower rates as soon as possible.

FBAA managing director Peter White AM says decision-makers have underestimated the financial, personal, social and mental health impacts on borrowers after such a significant rise in a relatively short time period.

He said his concern is backed up by this week’s media reports of an internal memo from a July meeting between the RBA’s Financial Stability division and representatives from the National Debt Helpline (NDH) that revealed the NDH has seen a “significant increase in hardship requests” recently.

Those seeking financial relief included many who had contacted the service for the first time and higher income earners, with the reported memo noting that “many callers were gainfully employed.”

Mr White said while this comes as no surprise to him, it should be a wakeup call for Australia. 

“Our 2023 ‘Australian mortgage and rental affordability survey’ released in May found that 83 per cent of Australians said that rising interest rates and rental prices have put pressure on their financial position.

He said the figure was almost identical when isolated to those with a combined household income of between $3000 and $4000 per week and also those with a combined household income of more than $4000 per week.

“It’s become worse since rates have risen because now credit is harder to get due to both the increased rates and servicing buffers.

“More people are trapped in their mortgages with their banks, not being able to move to a better deal.”

Mr White said finance brokers are working with borrowers to help them align with the policies of lenders, however it’s not always in their best interests to change lenders.

“A pause is better than a rise but what borrowers really need is relief, and if it doesn’t come soon then more people will be seeking financial crisis support.”

The Finance Brokers Association of Australia (FBAA) says while it welcomes yesterday’s decision by the Reserve Bank of Australia (RBA) to again keep interest rates at the current level, it is frustrated that practical steps that could help borrowers are not being taken. 

FBAA managing director Peter White AM said the association’s recent research highlighted the enormous financial and mental health pressure being faced by both borrowers and renters, and a two-month interest rate pause isn’t a silver bullet. 

“We have outlined practical and tangible steps that can help borrowers and ease some pressure, but so far we’ve seen no movement,” he said. 

“These proposed steps won’t magically solve the problem but they will give borrowers a fairer go and ensure banks don’t take advantage of those in a vulnerable position.”

Mr White said the FBAA had written to government about these issues and will continue to fight for borrowers. 

He outlined the steps as follows:

“We need a pause on interest rate rises for a further three months until the true impact can be evaluated.

“Banks must be forced to disclose the introductory / new borrower rate, as well as the current existing (back-book) borrower rate.

“There must be a government inquiry into bank practices around the issue of disclosure, to protect borrowers and vulnerable markets.

“The Australian Prudential Regulation Authority must reassess its decision to continue with a 3 per cent loan serviceability buffer for mortgages, and to reduce this to a rate of 1.5 to 2 per cent which is more appropriate in today’s economic environment.”

He said these measures are a pathway forward but require action from government, regulators and lenders. 

The managing director of the Finance Brokers Association of Australia (FBAA) has declared that the fight for fairness around clawbacks and other issues that adversely affect the industry will continue.

Peter White AM also revealed that the FBAA has recently presented a new round of submissions to the federal government regarding clawbacks, net of offset commission payments, APRA buffer rates, bank practices to entice new borrowers, and the need to better define broker eligibility for best interests duty.

However he also thanked the banks that have recently reduced clawbacks and those non-bank lenders that have eliminated them on some products, and credited the FBAA’s ongoing lobbying efforts for these decisions.

“We welcome each step that brings greater fairness for brokers, so I don’t want to ignore or downplay what some banks have done and the movement we are seeing.

“However there is a long way to go, and until we see real, tangible and widespread progress, we will continue our efforts.”

Mr White said over the past few weeks he has forwarded new submissions on various subjects to federal treasurer Jim Chalmers and assistant treasurer and financial services minister Stephen Jones, while he and the FBAA’s national executive team last week discussed the issues personally with finance minister Katy Gallagher when she called into the association’s national office.

“I can’t guarantee the end result or how fast any progress will be made, but I can provide our members and the industry-at-large a commitment that I and the FBAA will not give up,” he said.

He said while clawbacks were of high importance, the FBAA wants to see change on a number of other issues as well.

“Buffer rates need to be decreased, there must be changes around how BID is applied to bundled products in a home loan, and brokers are still being ripped off by bank practices around net of offset commissions.”

Mr White said the work is never done, and urged brokers to continue with the excellent customer service the industry has become known for.

“It makes our work a lot easier when decision makers in government know that we have Australian borrowers backing us.”

Australia’s finance minister the Hon Katy Gallagher MP visited the offices of the Finance Brokers Association of Australia (FBAA) last week to meet with the association’s national executive team.

FBAA managing director Peter White AM said the meeting was an opportunity to discuss policy that impacts the industry and to help the minister gain a better understanding of the important work undertaken by finance and mortgage brokers.

“We covered a wide range of issues including challenges with regulation in several areas, housing, and even issues that related to her role as minister for women,” Mr White said.

“While I speak regularly with senior ministers in my role, this was a wonderful opportunity for our entire executive team to be able to both hear from her and provide input on issues that are important to brokers across Australia.”

“To have such a senior minister came and spend an hour and a half with the group is testimony to the work done by the FBAA and the level of top-end engagement we have with Government, as well as the respect they have for our association and the industry.”

Fines and penalties for breaching regulations, including best interests duty (BID), have increased from July 1, 2023, and finance brokers should take note, the FBAA’s managing director Peter White AM has warned.

Mr White said ASIC’s penalty unit value has increased from $275 to $313 meaning the maximum penalty for individuals is now $1.565 million or “three times the benefit obtained and detriment avoided”.

He said while brokers rarely do the wrong thing, it is a timely warning that there is a legal obligation to always act in the best interests of the borrower.

“What sets finance and mortgage brokers apart from banks and others is that we must act in the customer’s best interests, and this is a great point of difference,” he said.

Mr White said that he felt the increase was an opportunity to remind brokers of the importance of maintaining the high standards the industry has set.

“As I meet with senior ministers and regulators, I am often complemented on the integrity across our industry and the way brokers conduct themselves, and we should be proud of that.”

He pointed out that the maximum fine at the implementation of the BID was $1.11 million.

“This is an increase of $455,000 or more than 40 per cent, and demonstrates the government’s determination to enforce regulations.”

The FBAA has announced it passed the 11,000 member mark at the end of the 2022-23 financial year.

As the association celebrates its 30-year anniversary, the number of members as of June 30 was 11,044, representing a net growth of 951 from the same date last year. Almost 93 per cent of members are customer-facing brokers.

FBAA managing director Peter White AM said the association has come a long way in 30 years and revealed that independent research found that the FBAA now represents around 68 per cent of all Australian Credit Representatives who are customer facing brokers.

“I am immensely proud of our record of advocacy over the past three decades and of the gains that finance brokers have achieved through the work of the FBAA,” he said.

“We’ve had wonderful directors, managers, staff, sponsors and supporters who have demonstrated that they are prepared to go above and beyond to ensure that our industry thrives.”

Mr White also paid tribute to members, calling them examples of professionalism and integrity, and pointing to data from the Australian Financial Complaints Authority (AFCA) to back up his claim.

“I recently saw AFCA figures for the period Nov 21 to Oct 22 which recorded 161 complaints about brokers, and only eight were FBAA Members,” he said.

“This is consistent with past figures from ASIC that show extremely small percentages of brokers that are subject to action from the regulator are our members.

“These figures are a testimony to the work the FBAA has done around education, professional development and governance, and the standards our members set.”

Despite the progress, Mr White declared that the association will not stop its trajectory of growth. 

“There is still much to do and achieve and there always will be,” he said.

“The industry is growing, technology is advancing, banking is changing, and we must ensure that brokers continue to evolve and succeed.

“Our promise to members is that we will always stand beside you and work for you.”

The managing director of the Finance Brokers Association of Australia (FBAA) says he is dumbfounded by Reserve Bank (RBA) governor Philip Lowe’s comments recommending that Australians cut back spending and find additional work to pay for increased mortgage repayments.

“Clearly the Governor doesn’t realise that mortgage holders are already sacrificing as they struggle to meet the burden of 12 rate rises in just over a year,” said FBAA managing director Peter White AM.

Mr White said the FBAA’s recently released 2023 ‘Australian mortgage and rental affordability survey’ showed that 28 per cent of Australians with a mortgage have already taken additional work while 30 per cent were considering it in April, and most probably have by now.

“We also found that 61 per cent of mortgage holders have cut back on weekly spending including groceries, 37 per cent have cancelled holidays, 27 per cent have withdrawn from offset and savings accounts and 61 per cent have cut back on leisure and social activities.”

“So my question to Mr Lowe is this: How much more can Australians bear and why should they suffer more because the RBA failed to prepare Australians by keeping rates so low for so long when the global indicators clearly indicated rate rises were coming?”

Mr White said the FBAA had predicted the situation Australians are facing today and it is ‘mind-blowing’ that the RBA didn’t.

“They should have acted earlier and raised rates over a longer period in smaller increments.”

He again called on the Australian Prudential Regulation Authority to immediately lower the 3 per cent loan serviceability buffer for mortgages, so that people can refinance easier.

“So many borrowers are struggling to refinance because of this buffer, which was necessary when rates were lower but should be adjusted now.

“I also urge the RBA Governor to better understand the overall effect these rates are having on the economy and people, and pause rate rises for at least four months.”

The Finance Brokers Association of Australia (FBAA) has called on the Federal Government and regulators to take decisive action – including cracking down on secretive bank practices – to ease the enormous financial and mental health pressures Australians are under following 11 interest rate rises in 12 months.

In a letter earlier this month to the treasurer and minister for financial services, FBAA managing director Peter White AM wrote, “we believe that the number and size of these rate rises over such a short timeframe could result in even worse economic and social outcomes than the problem the RBA was attempting to address.”

The association’s recently commissioned ‘2023 Australian mortgage and rental affordability survey’ found that a large percentage of Australians with a mortgage and who are renting are being forced to make major financial sacrifices, sell assets, take on additional work, and move to cheaper properties, while a growing number are seeking mental health assistance as a direct result of interest rate stress.

“All of us – the community, lenders and government – must work together to address this financial and mental health emergency, but the banks can’t be trusted to do this without government pressure.”

The FBAA has called for the following:

1. The RBA to pause interest rate rises for a minimum of three to four months until the true impact can be evaluated.

2. The Government to force banks to transparently disclose the introductory / new borrower rate, as well as the current existing (back-book) borrower rate.

3. An immediate government inquiry into bank practices around the issue of disclosure, to protect borrowers and vulnerable markets.

4. The Australian Prudential Regulation Authority to reassess its decision to continue with a 3 per cent loan serviceability buffer for mortgages, and to reduce this to a rate of 1.5 to 2 per cent which is more appropriate in today’s economic environment.

Mr White said too many vulnerable borrowers are being lured by banks into what they believe is a better interest rate deal, only to find that their rate and payments increase once they are deemed an ‘existing’ borrower.

“It is vital that new borrowers see this difference – which can be around 0.5 per cent – so they are financing or refinancing with full awareness.

“The Hayne Royal Commission placed a significant emphasis on banks being transparent, and banks should be forced to disclose both rates in all advertising, promotions and communications to their new and existing borrowers,” he said.

Mr White said he welcomed the decision by some banks to move away from cashback offers to new borrowers, but it was not enough.  

Startling new figures tell the story of the real impact on Australians directly due to ten consecutive interest rate rises over the past year, and the effects are not just financial.

Australia’s peak finance and mortgage broker body, the Finance Brokers Association of Australia (FBAA), has released the 2023 ‘Australian mortgage and rental affordability survey’ conducted by respected research firm McCrindle.

It found a large percentage of Australians with a mortgage and who are renting are struggling and are being forced to cancel holidays, sell assets, take on additional work, cut back spending on groceries and social activities, withdraw savings, and in the case of renters, move to cheaper rental properties.

Managing director of the FBAA, Peter White AM, said a similar survey conducted by the association in 2021 – six months before the first rate rise – predicted today’s findings, and Australians have a right to question how our monetary policy has been managed.

At the time the FBAA warned, “many Australians are clearly on the brink and are sleepwalking into disaster, living in the false hope that rates will stay this low.”

“Governments and lenders knew this was coming because the global indicators were there, but somewhere along the line there was a failure to prepare Australians who had become complacent after more than a decade without seeing any rate rises.

“We are sadly now seeing the results,” Mr White said.

He warned that more pain was to come with probable future rises and many borrowers on low fixed rates still to convert to much higher payments.

In what should ring alarm bells across the nation, the survey found that the personal, social and mental health impacts on borrowers and renters are just as significant as the financial challenges.

The figures reveal that 50 per cent of those with a mortgage have experienced greater stress while more than a quarter report tension in their relationship with their partner or spouse. Almost half feel uncertain about the future, and there has been a significant spike in people seeking mental health help from a psychologist, therapist or counsellor, as a direct result of rising rates and rental prices.

Mr White, who has led mental health initiatives for the finance broking industry, said that these findings show that Australia is facing both a financial and mental health emergency.

“It will take a combined approach by government, lenders and the community at large to help people through this.”

He urged people to look ahead and seek assistance, “before the lender comes knocking and you are forced to.”

“Call your bank, mortgage broker or landlord the moment you are concerned that you may not be able to handle the increased payments. Lenders can often help and mortgage brokers have many options.

“And if you feel that you can’t handle the pressures please seek help from a health professional.

“This is a time to look after one another.”

The Finance Brokers Association of Australia (FBAA) has called on the Australian Prudential Regulation Authority (APRA) to reassess its decision to continue with a 3 per cent loan serviceability buffer for mortgages, as interest rates rise.

The association said the announcement by APRA that the current serviceability buffer would be maintained, makes it even harder for mortgage holders to refinance and negotiate a better rate.

FBAA managing director Peter White AM said the buffer – which is added to a lender’s interest rate for loan assessment purposes – means that many borrowers who can afford the interest rate of the day or even a little higher, are being unfairly prevented from refinancing.

“More borrowers are becoming ‘mortgage prisoners’, locked into a situation where they can’t access a better deal because they don’t meet the inflated assessment rate,“ he said.

“Others may be forced into selling their homes because the excessive buffer rate holds them prisoner to their current lender as rates rise. 

“A 3 per cent buffer was appropriate in the past because interest rates were at an all-time low and were always going to rise significantly, and this protected both the banks and the borrowers, but we can’t live in the past and a buffer of 1.5 to 2 per cent is far more appropriate today and in the near future.”

The FBAA questioned whether APRA is potentially “signalling to the market that there is another 3 per cent rise to come, because there is no other reason to keep borrowers captive.”

Mr White said it wasn’t the fault of Australian consumers that interest rates have jumped so quickly, but they are the ones being penalised.

“It’s time borrowers stopped paying the price for the rapid rise of rates.

“The FBAA was predicting the rise well before the RBA acted but at the time many didn’t believe us. Rates should have been managed better and raised in smaller increments over a longer time period.”

He called on APRA to reassess the buffer rate on a regular basis, “but not less than every two years to ensure they are fit for purpose in the market they are representing now and in the near future.”