Empower Update

In response to regulator directions, there are a number of important changes for the Empower Range of loans that come into effect from 1 Feb 2018, these are summarised below:

  • With the exception of construction loans (where upfront remains payable on credit limit). Upfront commissions will be payable based on the loan advanced or drawn down, rather than the credit limit. The rate at which they are paid, 0.70% (plus GST) remains the same.

  • Utilisation clawback remains in place, but now calculated based on the loan amount advanced rather than the original credit limit. If net loan balance (taking into account offset balances) is reduced by more than $50,000 over the scheduled repayments, then a pro-rata clawback of upfront is triggered.

  • The trailing commission Empower range of loans has been standardised to a flat trail of 0.15% (plus GST)

  • Variation fees for variations referred to Macquarie customer service team have also changed. For variations which increase the loan amount by:

    • Less than or equal to $40,000, then a fee of $200 plus GST will be payable. (Appropriate percentage passed through to branch).

    • Greater than $40,000, then the amount paid will be equal to the upfront commission multiplied by the increased amount. (Appropriate percentage passed through to branch).

Finally, there has been an increasing number of loan variation requests submitted in some cases only a handful of weeks after initial loan settlement. While we acknowledge that circumstances can change, we thought we would take the opportunity to remind everyone of the key parameters for assessment of a further advance. Aside from serviceability, loan amount and LVR, there are two basic eligibility requirements that the lender will look for prior to any credit assessment.

Time: - Principal increase variation requests will only be accepted by the lender if the application is lodged six months or more from the settlement date or last principal increase of the current loan facility.

Conduct: - The current loan facility must not be in contractual arrears or over its credit limit and must have had good conduct

A further advance shortly after settlement can be a potential indicator of mortgage stress, hence the time and conduct requirement. This is simply a reminder to be sure to carry out a thorough fact find to identify all lending requirement, short, medium and long term upfront. Naturally, there may be exceptions which are impossible to identify upfront, if this is the case for your customer, you will need to seek approval from your Macquarie BDM for an exception.