2019 was a huge year for our mortgage broking business and the finance industry in many ways, and we know it was huge year for lots of our clients too. Dream homes were purchased, investment portfolios were bolstered and big projects embarked upon for many. For us as mortgage brokers, being a small part of the action for huge life events like this is why we continue to love every part of what we do. It’s the personal stories, the personalities, hearing about your jobs, your kids and watching the glint in your eye as you tell us about the things you love.
As we look towards 2020 with a hunger to be better, to do more, to inspire and be inspired, we reflect on some pivotal moments of 2019.
- Royal Commission takes a swipe at Mortgage Brokers
Kenneth Haynes handed down his report following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, proposing a consumer fee-for-service amongst other changes to our industry.
The recommendations, including the introduction of a customer fee-for-service, threatened to destroy the viability of the mortgage broker channel, which in turn would reduce competition, limit access to finance, and drive customers back into the branches of the banks with the largest branch networks.
Despite providing in-principle support to all 76 recommendations, on 12 March 2019 the Coalition Government announced that if re-elected, it would not legislate the fee-for-service, and maintain mortgage broker trail commission and up-front commission with a review of the arrangements in 2022.
2. Rates moved to new historic lows
Australia saw growth slow – to below 2% – as the housing construction downturn, weak consumer spending and investment and the drought all weighed. Unemployment and underemployment drifted up, wages growth remained weak and inflation remained below target. As a result, the RBA was forced to change course and cut interest rates three times from June and to contemplate quantitative easing. The two big surprises in Australia were the re-election of the Coalition Government which provided policy continuity and the rebound in the housing market from mid-year.
3. Investors started to trickle back
Among the perception of doom and gloom and highly publicised global negatives including trade wars, slowing global growth and an obsession with recession, monetary easing and the prospect it provided for stronger growth ahead combined with the low starting point resulted in strong returns for investors.
4. APRA scrapped the assessment rate rule
The Australian Prudential Regulation Authority (APRA) eased lending restrictions by scrapping a rule introduced in 2014 that had required mortgage customers to be assessed on their ability to manage repayments with 7.25% interest rates.
Instead, authorised deposit taking institutions (ADIs) were able to review and set their own minimum interest rate floor for use in serviceability assessments and utilise a revised interest rate buffer of at least 2.5 per cent over the loan’s interest rate, essentially paving the way for loan applicants to secure larger loans.
5. Perth property market showed signs of recovery
House price gains in Perth’s inner and western suburbs produced the first overall price growth for the city’s residential property market in 18 months.
During November 2019, prices rose by 0.4 per cent in the Greater Perth region, with a median value of $470,000 for houses and $335,000 for units. That represents the first increase since April 2018, when prices began to deteriorate amid tighter credit conditions during the banking royal commission.
CoreLogic head of research Tim Lawless said while price growth was the culmination of a gradual improvement in market conditions, there were “firm signs” the nascent recovery would become something more substantial.
Curtin University Professor of Economics Rachel Ong cautioned that it was too early to call a house price recovery in Perth, but said there were structural factors which would drive prices up in time.
“Regardless of whether this is just a blip in the trend or whether we are actually starting to see an upturn … it’s my view that sooner or later we are going to see the Perth housing market start to turn,” she said.
6. We were named as finalists for the Better Business Awards
To end the year on a high note, Base Home Loans received news that we are finalists in the “Best Customer Service” category at the Better Business Awards 2020. This is a huge achievement for us and we couldn’t be prouder.
As we now turn our attention to 2020, we are excited for a big year ahead on many fronts. With talk of further interest rate cuts, a recovering property market and the continued re-emergence of investors, we’re looking forward to helping more of you with your mortgage and refinancing requirements this year.
Thanks for your continued support.
