Media Statements

As around 800,000 fixed interest mortgages are set to convert to variable rates in 2023 – in what is termed the mortgage cliff – the Finance Brokers Association of Australia (FBAA) has urged borrowers to consider their options well before the end of their fixed rate term.

FBAA managing director Peter White AM said that some borrowers converting to variable rates will have a significant and sudden increase in their monthly payment. 

“If you leave it to the last minute to consider what to do, your choices will be more limited, so do your research now,” he advised.

He also warned against focusing only on rates. “You must choose the option that is best for your individual needs.”

Mr White said anyone coming off a fixed rate or thinking of refinancing should ask themselves these four questions:  

1. Lifestyle – What do I want to do over the next one to two years? 

“Fixed rate loans are less flexible and often come with high early-exit fees, so if you want to renovate, install a pool, take money from the mortgage for a holiday, or refinance in the near future, a variable rate may be the best option.”

2. Affordability – Do I prefer to play the market or would I prefer the stability of a fixed rate?

“This is a personal choice based on what best suits the borrower. They should consider their personal borrowing needs in the coming year or two.”

3. Financial – Is it financially beneficial for me to refinance?

“While refinancing can mean a lower interest rate and even a cash incentive, these may be offset by fees and exit costs. Nothing is free and there are times when it is more expensive to refinance. In these cases, it may be best to stick with your current lender and try and renegotiate.” 

4. Lender – What lenders do I approach?

“Most borrowers don’t know the range of lenders available to them. While everyone knows the major banks, a significant percentage of mortgages are now being written by second tier and non-bank lenders which are less known. In fact, non-bank lenders are only accessible through finance and mortgage brokers. These lenders can be very competitive, and can also be more flexible which often suits for example small business owners with varying incomes, or those with past credit issues.”

Mr White said there are many more options available through mortgage brokers, and that brokers are bound by law to act in the borrower’s best interests.

“But it still comes down to the fact that the best option for each person is their individual circumstances.”

The Finance Brokers Association of Australia (FBAA) has announced the appointment of a new board member and commendations for a number of industry participants following its recent AGM.

Former QLD state president Christine Green has joined the board, increasing its female representation, a move hailed by FBAA managing director Peter White AM.

“Christine is a skilled business development manager, coach and mentor, and she is a passionate advocate for finance brokers and diversity in the industry,” he said.

Ms Green has more than 20 years banking and finance experience and is currently business development manager (business capital) at Liberty Financial.

Mr White said the FBAA has worked to engage more women across the industry for many years and will continue to do so. 

Steve Rasmussen was re-elected for another term on the board, joining the seven other members who were not up for re-election.

The FBAA also honoured those who have gone above and beyond over the past year, and issued commendations to Madeleine Dart from Outsource Financial, Peter Ellis from Finance Broker Mento, past state presidents Trent Carter (WA), Joff O’Shanessy (SA), Nick Wormald (NSW) and Christine Green (QLD), and a number of FBAA staff members.

The AGM also saw several Board appointed Fellow members including Sam White of LoanMarket Group, Dien Le of Finance & Coffee, Krystal Camilleri of Jellyfish Marketing and Jayden Vecchio of Hunter Galloway Finance Pty Ltd.

Mr White applauded all those who, “helped make 2022 such an outstanding year” and said that the industry as a whole can be proud of the year that was.

“From the FBAA’s perspective 2022 saw all-time record membership numbers and member satisfaction higher than ever before.”

“We exist for our members, to champion them, to help them thrive, and to work closely with governments, regulators and other stakeholders to create the best environment for them to build successful businesses.

“Through the efforts of our team and our members, we have also scored some great goals for the entire industry.

Those who attended the conference heard the assistant treasurer and minister for financial services Stephen Jones say that the FBAA’s constant dialogue and advocacy was the catalyst for positive change, and we will do it all again in 2023.”

Conferences are usually noisy affairs, but this year’s FBAA National Industry Conference, less than two weeks away on November 11, has a twist.

It’s the association’s first “silent conference”, where delegates not only hear speakers from the main stage, but break off into smaller rooms to don headphones and listen to the speaker without the distractions of outside noise.

A little different, but according to FBAA managing director Peter White AM, all part of ensuring industry professionals learn more on the day.

“We are aware that different topics interest different people, so we wanted to provide breakout sessions where delegates could choose their sessions.

“However given the venue has rooms next to each other, we didn’t want noise travelling. We saw this concept work well earlier this year within the industry and thought it would be a great addition.”

The conference at Sea World at the Gold Coast will be opened with an address from the Hon Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, and will feature a range of speakers not only from the finance sector but across other areas that will help brokers do business better.

The day won’t stay ‘silent’ for long, because the famous conference gala dinner will be within the Sea World complex with an ‘Ocean Odyssey’ theme.

“The gala dinner is always a wonderful way for people to catch up, let their hair down and enjoy something special, so we encourage everyone to come, either as yourself or if you are feeling adventurous as a pirate, ship’s captain or mermaid,” Mr White said.

There is a serious part of the night too, as the industry’s top performers are recognised in the 2022 FBAA awards of supremacy.

Registrations are still open, and more information can be found on the FBAA website. As always, the conference is open to the entire industry, not just members.

A national finance and mortgage broker focus group has revealed that individuals who have recently been through a marriage or relationship breakdown are now finding it almost impossible to refinance or take out a new loan, and has blamed a lack of compassion from lenders.

Managing director of the Finance Brokers Association of Australia (FBAA) Peter White AM said this was the biggest concern of brokers from across the country who participated in the association’s recent focus group to discuss the impacts of interest rate increases and rising inflation.

He explained that as credit assessments are tightening, those who have recently divorced or separated are paying the price for actions of their former partner or the circumstances in which they found themselves in, and called it “grossly unfair”.

“It’s always been a more difficult path for people in this situation, but in the past it has been easier for them to buy out a property that was owned jointly, or refinance to start a new life,” Mr White said.

“But now banks are simply rejecting applications outright, due solely to financial problems around the relationship breakdown, and despite an applicant having an excellent credit history to that point.”

He said every situation is different and lenders should assess every person individually and take into consideration the circumstances of any finance problems.

“Relationship breakdowns are messy. Sometimes one partner makes decisions that affect the other, or the stress of the situation causes medical issues, or legal and relocation costs put financial pressure on a couple and repayments fall behind.

“But surely the Australian spirit of a fair go must be extended to people who deserve a chance to reposition their lives and move on from a difficult situation.”

Mr White said brokers are helping and some have successfully made the case for their clients to lenders, but the solution is for banks to change the way they are making assessments. 

“We understand there are responsible lending criteria, but this is no excuse for denying people who meet these criteria the opportunity to start again by holding a past circumstance against them forever.

“Banks can easily extend some compassion instead of being pig-headed and applying an overarching and inflexible policy for everyone.”

The head of Australia’s peak body representing finance and mortgage brokers says the Reserve Bank of Australia (RBA) must take responsibility for the difficult situation facing many Australians.  

Peter White AM, managing director of the Finance Brokers Association of Australia (FBAA) said today’s expected rise is another huge blow and that, “there will be more rises to come.”

He said it was disappointing that the RBA was telling Australians that it had no intention of raising interest rates when all of the signs were there to suggest otherwise.

“The FBAA was warning of this in early 2021 when no one else was, and we were laughed at by commentators who were listening to the RBA,” Mr White said.

“To prove our point we commissioned a survey and went public with it in November, and for the first time people started to take notice.”

At that time Mr White said, “Many Australians are clearly on the brink and are sleepwalking into disaster, living in the false hope that rates will stay this low.”

In response to the question of how likely it was that rates would rise, Mr White said in 2021, “The only way is up. Rising inflation in New Zealand has just seen a rate rise there, and other nations including the UK and USA have raised rates or are talking about it. Australia is not exempt to international trends.”

He said the RBA should have acted 18 months ago.

“Their lack of action and lack of foresight has resulted in devastation for many Australian families.”

Following today’s expected rise, his advice to borrowers who don’t have significant surplus funds is to “think about spending a little less this Christmas and prepare for more rises.”

He warned those thinking about refinancing that lenders look at discretionary spending when they assess creditworthiness, and spending up over the festive season could work against some who try to refinance.

“Be aware that lenders will assess you not at the current rate, but at a rate approximately three per cent higher, as they take future rises into consideration.

“This means for many people to meet refinancing criteria, they must be able to meet repayments around five to seven per cent – and likely higher after today – above the rate at which they were approved when they took out their current mortgage. Depending on the amount of the loan, this can equate to more than $2,000 per month higher.”

While the majority of finance brokers focus on residential mortgages, an increasing number are delving into the area of commercial finance. 

To educate and resource brokers, the Finance Brokers Association of Australia (FBAA) will run its commercial masterclass in-person on September 6, for the first time since 2019. 

FBAA managing director Peter White AM said the aim was to provide brokers with an opportunity to expand and develop their business. 

“Brokers should always be looking at new opportunities and this is a profitable and growing area of lending.”

However he cautioned that it requires specialist skills and knowledge, as it is a complex area.

“Brokers considering commercial and SME lending need a paradigm shift, as the NCCP act doesn’t legally apply. Commercial lending doesn’t fit cleanly into a simple box as does home loan lending,” he explained. 

Aimed at providing brokers with the skills to engage in commercial finance, the event will take place in Sydney and have an online option. 

The masterclass helps brokers understand every aspect of commercial lending including how to read a valuation, understanding and assessing different markets, writing local applications and the importance of executive summaries.

Speakers include Stuart Donaldson from Accendo Financial, Dan Hill from Opteon, Glenn Mitchell from Vow Financial, and Glenn Screech and Matt Kalinski from Lloyds Auctioneers. 

FBAA National Partnerships Manager Leah Renwick will also host a panel of commercial brokers. 

Mr White said the day would provide high quality training and ensure brokers entering this market do so with best practice principles.

“Bottom line, is that without adequate training and skills, brokers who have only done residential won’t succeed in commercial finance,” he explained.

FBAA members will receive four CPD hours. Information can be found on the FBAA website.

The Finance Brokers Association of Australia (FBAA) has announced its 2021-22 financial year membership figures along with an executive staff shake up and some surprising industry statistics.

The association’s membership as at 30 June stands at 10,093, an increase of almost 12 per cent from a year earlier. Around 95 per cent are customer-facing finance brokers.

FBAA managing director Peter White AM said the numbers reflect both the growing popularity of the industry and the reputation of the FBAA for providing high quality member services.

“We are very pleased with this growth, which exceeded our target and is the first time we’ve broken the 10,000 mark,” he said.

“Many of our new members have recently joined the industry, while others decided to make a change in their affiliation.”

Mr White also hailed the industry’s credibility and professionalism as a whole, revealing that ASIC had taken action against only 69 consumer mortgage brokers over the financial year, noting that in 2016 this number was 274.

“This reflects the way the industry has managed itself and shows the standards that are now expected and upheld.”

However he particularly praised the FBAA board and the association’s governance standards, because only 2 of the 69 were FBAA members.

“We are naturally proud of the fact that the FBAA has such high standards because it helps the entire industry.”

To reflect its growth the FBAA has announced some significant executive movements.

Well-known east coast state manager Leah Renwick has been promoted to the new role of national partnerships manager, and taking her place is Christine Anderson who has earned herself a promotion from her role of head of memberships.

The memberships team will now be managed and restructured by recently appointed COO Phillipa Byrne, with three new staff being appointed to support roles.

Mr White thanked members for their support in what was, “an extremely successful year for the association”, and said the focus in now on the year ahead.

On behalf of the FBAA I extend my congratulations to incoming Prime Minister Anthony Albanese and the Australian Labor Party for their election win.

The FBAA has enjoyed a close relationship with the ALP over many years while in opposition and we look forward to strengthening this as they lead our nation in government. In particular I thank them for their recent commitment to me personally that they will not be considering further broker remuneration reviews, and that they will enter into discussions to review fair remuneration structures on clawback reductions.

I’d also like to thank the outgoing Morrison Government for their support of finance and mortgage brokers over many years, including through the challenging times of the royal commission. They constantly engaged with us and understood the importance of our sector. Former treasurer Josh Frydenberg was also approachable and always willing to listen, and I wish him the best for his future.

The FBAA has been extremely active in talking over many years to all sides of politics, and we have developed a close channel of communication with government and opposition. We will continue to inform both sides and look forward to representing our industry in an apolitical manner for the benefit of brokers. Given the new makeup of the senate we will also reach out to the Greens and independents who sit on the cross bench.

Thanks to the dialogue with both the former Coalition Government and the current Labor Government, we have been able to ensure that our industry is in a strong position and this only benefits Australian consumers.

The Finance Brokers Association of Australia (FBAA) will tackle the issue of gender bias as part of its annual International Women’s Day (IWD) event which will be held in Brisbane and live streamed nationally on March 8.

In keeping with this year’s global theme of #BreakTheBias, the event will feature a panel of leading industry women representing different generations who will consider whether bias is generational.

Joining FBAA managing director Peter White AM as MC will be former Prospa head of industry and partnerships Alex Brgudac, who said bias is formed as a child.

“It’s deep-seated and developed in our formative years, with values and principles passed down generally by parents or other influencers that are close to us during those years,” he said.

Mr Brgudac believes that this means it will take one to two generations before society sees a fundamental change in behaviours.

Mr White said it’s a conversation that will stir debate but is necessary within the broking industry.

“We all know that our industry will thrive as more women continue to join and gain even greater influence, and the FBAA is excited to be a driver for progress,” he said.

The event, which is sponsored by Aquamore will be held at the Glen Hotel in Brisbane from 1 to 4pm with free entry and optional charity donation. High tea is provided. Mr White said the event is open to everyone and attendees will receive three CPD hours.

As talk of interest rises increases, a national “Australian mortgage and rental affordability survey” has predicted dire consequences for the economy, finding that the majority of Australian borrowers and renters could not meet a mortgage or rent increase equivalent to a rate rise of only one per cent.

The survey was commissioned by Australia’s peak finance and mortgage broker body, the Finance Brokers Association of Australia (FBAA), and conducted by respected research firm McCrindle.

Understandably when asked if rising interest rates would put pressure on their financial position, 66 per cent agreed either strongly, somewhat or slightly.

However when asked more specific questions, the responses stunned the FBAA’s managing director Peter White AM, a 40 plus year industry veteran, who said Australians had possibly grown complacent after almost 11 years without seeing a rate rise.

“Many Australians are clearly on the brink and are sleepwalking into disaster, living in the false hope that rates will stay this low.

“This survey is a wake up call and shows that even a small rise in rates – which is looking more likely next year with rising inflation – could be catastrophic for our nation,” he said.

He was referring not only to the 56 per cent of people who agreed (strongly, somewhat or slightly) that “If interest rates were to rise I would need to look at refinancing my home”, but to the response when people were asked how likely they were to be able to meet a monthly increase in their rent or mortgage of $300.

“Shockingly 57 per cent of people paying a mortgage or rent answered ‘not at all’, and we are talking about an increase equivalent to only one per cent based on the average home loan.

“One per cent is not a large increase. It will happen and with the RBA recently deciding not to intervene to stop increasing yields on three-year government bonds, it will likely happen soon.

“My message to Australians is that we must be better prepared.”

He said borrowers have rightly taken full advantage of historically low rates combined with schemes that allow for low deposits, but issued a chilling warning.

“The housing market has soared and there is a reasonable chance will undergo a correction, meaning that those with low deposits who have stretched themselves to make large repayments could see themselves with negative equity, owing more than the value of the property.

“Add a mortgage increase they can’t pay, and there could be a lot of people in real trouble.”

Mr White pointed out that those who said they couldn’t meet a $300 per month repayment included 46 per cent with a combined gross weekly income between $2000 and $3000, showing that the problem is not limited to very low income earners.

“However there are sections of our community who are more vulnerable and this includes those who rent, remembering that any rate rise a landlord incurs will be passed on to the renter.”

Survey respondents who said they “could not meet at all” a $300 per month rise, include 80 per cent of those in single parent families, 76 per cent with a combined gross weekly income of $700 to $1200, 71 per cent living in remote areas, and 70 per cent of baby boomers.

“Where do these people go if they have to walk away from their home? Public housing, the street?” he asked.

“The options for lower income earners are slim and this will reverberate throughout our society, most likely on the back of the COVID economic struggles.”

-End-

Peter White AM answers key questions

How likely is it that interest rates will rise?

PW:  Based on the history of interest rates we are in a very unique situation of prolonged very low rates, so the only way is up. The housing market is over-heating and the banks, regulators and government are already talking about lifting the floor rate (a higher rate used to calculate repayments) to slow borrowing. This along with rises in fixed rates points to rising interest rates. Inflation is also going up and tipped to increase further. Rising inflation in New Zealand has just seen a rate rise there, and other nations including the UK and USA have raised rates or are talking about it. Australia is not exempt to international trends.

What should Australians be doing to prepare?

PW:  We don’t need to over-react but we do need to take an honest, balanced and informed approach. I’d say to borrowers, don’t over-commit yourself, and don’t go deep into payday loans, personal loans or credit cards because rates will rise. Borrowers and renters need to have surplus funds to pay an increased amount.

If rates rise, can’t borrowers refinance or shop around for a better rate?

PW:  They should be able to but there is a significant danger. The Government must ensure banks don’t overstep the mark in lifting floor rates as this adds to the problem, and we’ve seen this in the past. If banks assess new loans at say six per cent, even if the prevail rate is two per cent, this can create a group of people we term ‘mortgage captives’. They can service a loan at say 4 per cent which is still higher than they are paying, but may not be able to show servicing at six per cent which the bank is using as their benchmark. When rates rise they are prevented from refinancing because they are being assessed at a rate far higher than is needed. The borrower has the means to service the loan but because they are being assessed at a higher rate, the borrower is forced to stay and pay more. They are in effect captives to a higher mortgage. This survey shows that this could lead to disaster, as we know that many borrowers will be stressed at only a one per cent rise.

Key findings and facts of the Australian mortgage and rental affordability survey

• 75% believe that rising interest rates would put pressure on their financial position

• 56% say that if interest rates were to rise, they would need to look at refinancing

• $571,992 is the average Australian home loan (written July 2021 – finder.com.au)

• $300 is the approx. monthly increase in repayments on the average home loan if interest rates were to rise by 1%

• How likely are Australians to be able to meet a monthly increase in rent or mortgage by $300 (approx. 1%)?

• Only 9% say they are extremely likely to meet this increase
  • 57% – say not at all

• “Not at all” say…
  • 46% with combined gross household income of $2000-$3000
  • 76% with combined gross household income of $700-$1200
  • 85% with combined gross household income less than $700
  • 71% living in remote area
  • 40% of people with bachelor or postgraduate degrees
  • 80% of single parent families
  • 70% of baby boomers

Survey methodology:

This survey is nationally representative of Australians by age, state and gender and was in field from the 20th – 25th of August 2021, yielding 1,004 completed responses. Several segmentation filters have been applied to understand the results further. Survey conducted by McCrindle research.