Media Statements

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.

The Finance Brokers Association of Australia (FBAA) held its annual general meeting today and announced a record financial year and significant member growth.

FBAA managing director Peter White AM has told the AGM that the association has had its best ever financial result. As well as holding net assets of $1.853m, it recorded net retained earnings of $769,000 over the 20-21 financial year.

He said the result would enable the association to continue to invest in members at even higher levels than the past.

“This was achieved with no government COVID stimulus, no increase in membership fees for three years, no redundancies or removal of staff, and no reduction or terminations in any supplier contracts, he said.

The association also revealed it experienced a net membership growth of 10.78 per cent over the past year, passing the 9,400 mark in October, the vast majority of who are customer-facing brokers 

Mr White said the outstanding results were a testament to good governance and the focus on member support and benefits.

“We’ve always been a grass roots organisation run by brokers for brokers, and I believe that’s why everyone within the FBAA always works tirelessly for members.

We all know the challenges of the industry and are all directly affected by the highs and lows,” he explained.

The FBAA also thanked current board members while welcoming onto the board Barry Honey, who was appointed, and former NSW state president Nick Wormald.

Two directors were farewelled – Gus Gilkeson who stepped down due to business needs and Chris Szigeti who has completed his term.

“We thank both of them and make a special mention of Chris who has served with distinction for many years and has been a great support to members and fellow board members.”

Mr White said the association’s strength allows the FBAA to provide even more benefits for members and to further lobby government more effectively in order to protect the industry’s future.

The FBAA has also announced the following member commendations:

Appointed as fellow members:

• Greg Rodgers, external legal counsel – for many years of expert service to the FBAA for legal advice. Greg sits on the DRS Committee as a volunteer and continues to provide expert guidance.

• John Kolenda, managing director of the Finsure Group – for his support of the directions of the FBAA and its Concierge Program and the endeavours of the strategic direction of the FBAA.

• Gerald Foley, managing director of nMB – for his very long service to the industry and support of the FBAA and its undertakings to industry.

• Renee Blethyn, CoreLogic – for her support and work with the FBAA’s mental health counselling program and ongoing mental health events, and for the mental health well-being of our industry and being prepared to be a voice in this space.

• David Hannah, general manager McMillan Shakespeare Group – for his long term support and input into the asset broking sector and to his contributions to the FBAA in that field.

Board commendations for exceptional service to the association and members:

• Gus Gilkeson, past NSW state president and past board member. He has retired from his roles due to increased business commitments.

• Glenn Mitchell, Vow YBR Group – for ongoing support and FBAA committee representations.

• Nick Lane – FBAA finance manager who has taken the association’s professional reporting abilities to a higher level and embraced the association with great vigour.

• Leah Renwick – long serving FBAA staff member who has always kept members needs and understandings first and foremost in her dealings.

• Judith Hocking – FBAA staff member in memberships, who has constantly provided a high level of service and communications with our members.

Mr White said, “We thank all of these members and staff for their amazing contribution to the success of not only the FBAA but the industry at large.”

Managing director of the Finance Brokers Association of Australia (FBAA) Peter White AM says while the industry will always emphasise in-person relationships with customers where possible, technology will advance business growth.

He was speaking following the launch of the FBAA’s new customer relationship management system designed to streamline broker needs and provide benefits in the form of combined buying power.

“The days of manual processing are over and our message to all brokers is to embrace it, learn it and make it work for you,” he said.

“We all must work together to ensure brokers spend more time servicing clients and generating new business, and less time doing administrative tasks.”

He said FBAA members can now update details, complete membership renewals, upload documents and download certificates for their aggregator and lenders all online though the new membership portal.

New memberships are now processed in less than 60 seconds.

“While most brokers are doing more online, some are still dragging their feet. While I understand change can be hard, my message is to make the effort and you’ll get better outcomes,” Mr White said.

He also said there are direct benefits to brokers using the system through the new FBAA member benefits program launched only days ago, which offers benefits and discounts to over 4500 products covering homewares, electronics, travel, children’s products and even motor vehicles. 

The association’s new Education Institute will soon be launched as an online product accessible through the new member portal.

“Bottom line is that efficiency provides brokers with more time that will lead to more business. “The industry is going forward and let’s hope no broker gets left behind,” he said.  

The Finance Brokers Association of Australia (FBAA) has called on brokers across the entire industry to take a short time out on September 9, the annual R U OK? Day. 

Managing director of the FBAA Peter White AM says the past few years has been arguably the most traumatic time finance and mortgage brokers have ever experienced, first with the Royal Commission and then the COVID pandemic. 

“I understand that I have been speaking about mental health for a long time but there is a reason, and that is because I talk to brokers across Australia everyday and I am aware of what they are going through and how it affects so many people.

“I have always believed that a healthy industry is only obtained through healthy people and that’s why each year we support the annual R U OK? Day.”

To assist brokers the FBAA will be hosting a special R U OK? Day live stream event sponsored by wellness sponsor Suncorp. The livestream event, which will include an address by Federal Minister for Health Hon Greg Hunt MP, is free and open to all brokers, not just FBAA members. 

Speakers on the day will include R U OK? Day Ambassador Jo Hassan who will share tips for meaningful conversations that make a difference in the lives of those around you, and self-mastery and peak-performance coach Ash Playsted. 

The event will focus on creating awareness, interacting with others, and keys to addressing mental health issues. 

“Knowing how to start the conversation and notice when someone is in need is the goal of this important event, and we hope brokers will take a few hours out of their day to participate,” Mr White said. 

Brokers can register for the livestream event here:

https://cvent.me/5xZk7a

The Finance Brokers Association of Australia (FBAA) says recent claims in the industry media that a high number of brokers are closing shop are not correct, with managing director Peter White AM pointing out that those making the claims are likely driven by commercial self-interest. 

“It’s pretty obvious why some may want to push this questionable narrative and that’s to build their business.

“My message to them is to take out an ad if you have a message to sell, but please stop trying to destabilise our industry.”

Mr White said there will always be brokers leaving through retirement or change of career, but overall the number of brokers is well up on last year, and he revealed the FBAA has recently conducted independent research that proves it.

The association’s annual ‘Consumer to Broker Ratio Report’, compiled by Core Data, has found that, “The total number of credit representatives in Australia sits at 19,683 in 2020, up from 17,881 in 2019.”

Furthermore, the report states, “The dip in 2019 interrupted a period of continuous growth since 2012, which was likely driven by the royal commission.”

The total number of licensees identifying as finance and mortgage brokers in Australia has also increased.

Mr White also pointed to the FBAA’s own figures that show FBAA membership at the end of the 2021 financial year had increased by 10.8 per cent over the same time at the previous year. The number of members was 9,034 as of June 30 and is now well over 9,200, with more than 90 per cent being customer-facing finance and mortgage brokers.

He acknowledged that there have been plenty of challenges for the broking sector over the past few years but said many industries have faced significantly more heartache during the pandemic.

“Despite the challenges our industry is strong. Right now most brokers have never been busier, so let’s focus on the strength, resilience and professionalism of our great industry.”

The Finance Brokers Association of Australia (FBAA) has called on brokers to get vaccinated to protect themselves and the industry at large.

FBAA managing director Peter White AM said brokers have a high level of interaction with the community including visiting people in their homes, and being vaccinated will provide clients with a level of confidence.

He said the Association’s pandemic risk committee is re-enforcing to all event attendees and industry of the importance of taking the necessary precautions around social distancing, face masks and general hygiene.

The committee will also be taking a stance on requirements for in-person events.

“We understand that people have the right to different beliefs, but we also have a duty of care to protect people at events and training sessions, and we’d prefer people to be vaccinated or attend online,” he explained.

Mr White commended the Lendi Group who have committed to be a part of the Great Aussie Vaccine Drive by allowing employees across the Lendi and Aussie brands to receive their vaccination during work time.

“The FBAA has also done this for our staff, and we encourage the entire industry to do the same and come together, for the sake of everyone.”

The broking industry is flourishing, but this could be put at risk unless we are vigilant, he explained.

“Governments across the country are very reactive right now, and it would only take one instance of COVID that involves our industry and the scrutiny will be on us.

“So for the sake of our brokers, their families, staff, clients and other across the industry, we are taking a stand.

“Our message to everyone is to get vaccinated, and we are calling on all others in our industry to support this drive and play their part.”

The Finance Brokers Association of Australia (FBAA) has rescheduled its 2021 National Industry Conference due to recent border restrictions and lockdowns across the country caused by the highly contagious Delta Strain of COVID-19.

The conference, which usually sees around 1000 people from across the industry attend, is held each summer at the Sea World Resort on the Gold Coast, however due to the cancellation of last year’s event it was scheduled for July 30.

In an email to attendees, FBAA managing director Peter White AM noted that “over the past 18 months we’ve all become very used to change”, before advising that the conference will now go ahead on Friday November 5.

“This has been forced upon us due to current national COVID lockdowns and the uncertainty this brings. We don’t know what the situation will be with COVID and state borders in four weeks and we must always act in the interests of your health and safety, as well as ours,“ Mr White said.

However he confirmed that the entire program including speakers, theme, gala dinner and location will be the same.

Speakers include demographers Bernard Salt and Simon Kuestenmacher, finance commentator Michael Pascoe, Director of ySafe Yasmin London, and award-winning leadership strategist Shade Zahrai.  

Those who have registered will be transferred to the new date.

Mr White said while it is disappointing, the new date will be worth waiting for, adding that, “after the last 18 months, I think the gala dinner might just be what we need to end 2021.”

Australia’s finance and mortgage brokers will play a key role in helping first home buyers and single parents navigate the red tape and processes required to access new incentives announced in the federal budget, according to the finance brokers’ national peak body.

Managing director of the Finance Brokers Association of Australia Peter White AM said the announcements, which included the expansion of the First Home Loan Deposit Scheme and First Home Super Saver Scheme along with the introduction of a Family Home Guarantee to help single parents, were “great news and will be a turning point in many lives”.

However he also warned that “as with all government programs, the devil is always in the detail and the process is rarely simple”.

“Only finance brokers understand the market and the programs intimately, and as soon as the details are known and rolled out, we will educate ourselves on every aspect including eligibility requirements and processes.”

However he cautioned that some potential borrowers may still be disappointed when they consider the big picture.

“Brokers have a responsibility to adhere to the Best Interests Duty and responsible lending guidelines, and we must ensure that borrowers are prepared for when interest rates rise.

“In markets such as this home prices are increasing, and with deposits of only two per cent, it won’t take much of a drop in property values to create situations of negative equity, and this will affect those who can afford it least.”

While the 44-year industry veteran said his advice is to never leave it too long to enter the property market as prices will always keep rising in the long term, he also encouraged those thinking of taking advantage of these schemes to save as much deposit as possible.

“When borrowing it’s vital not to get caught up in the moment and look at the long term.”

Mr White said finance brokers are available and able to help borrowers understand the new initiatives and the way to access them.

“The Finance Brokers Association of Australia (FBAA) strongly supports the Federal Government announcement that tonight’s budget will include measures to increase home ownership.”

“In particular we welcome the support to first home buyers, single parents and women.”

“This budget can be a turning point in the lives of many people who deserve a break – including younger couples starting out and single parents. It will be exciting for many Australians.”

“Home ownership has become more difficult in recent times and this has a flow on effect across the economy, so these initiatives are urgently needed.”

“One note of caution however. In extremely low interest rate environments that create soaring house prices, government incentives to enter the housing market with very little deposit mean that some people could end up with a negative equity position when interest rates rise again and property prices fall or correct. Therefore the FBAA still encourages people to save as much deposit as possible as this will leave borrowers in a far better position in the long term.”

“However overall, our advice is to never leave it too long to enter the property market as prices will always keep rising in the long term.”

The Finance Brokers Association of Australia (FBAA) says Australia’s small to medium enterprises (SMEs) are becoming increasingly frustrated with the big banks, and has issued a call for finance and mortgage brokers to take more of a market that contributes over $400 billion annually to the nation’s economy.

FBAA managing director Peter White AM said many brokers were already undertaking independent professional education to help them better understand business accounting practices in order to meet this widening gap in the finance market.

“The big banks have lost touch with small to medium business customers. These clients require flexibility and support, but instead they are being assessed with rigid credit guidelines and offered bank products that don’t meet their needs,” he said.

He pointed to a recent report by East and Partners that was commissioned by challenger bank Judo Bank, which found that 12 per cent of SMEs had no interaction with their bank in 2020 yet believe they needed more engagement.

The report also found that of the businesses that had any sort of interaction with their bank, only 15 per cent rated it high quality, with a whopping 54 per cent saying their interaction was low frequency and low quality.

“These figures confirm that there is a huge market being taken for granted by the big banks, which finance brokers can tap into through offering superior service and knowledge, just as we have with consumers.

“The Government’s current decisions around responsible lending ensure easier access to credit by SMEs, many of whom brokers already deal with through home mortgages.”

Mr White explained that small business people often use their homes for security when taking a business loan, and they have traditionally been more likely to default to the institution they bank with.

“This will change, because many business owners are not aware of the significant increase in fintech and non-bank lenders, something that finance brokers can help them with.” He said the FBAA will continue to talk to new small business ombudsman Bruce Billson to explore ways for brokers to better assist SMEs.