Vow Voice 12th March 2020

The major tailspin in the stock market caused by the Coronavirus scare should give a welcome boost to the Australian property investment market during 2020. Over the last couple of years, many investors have overlooked property in favour of investing in stocks because of the booming stock markets throughout the world. The ASX 200 jumped by around 20 percent last year, while Wall Street's benchmark index, the S&P 500, surged by 29 percent. And stocks continued to soar in price during the early part of this year until the Coronavirus hit with a vengeance.

In the last few weeks alone, the stock market has lost more than $200 billion in value and these losses may increase as the impact of the Coronavirus spreads throughout the world. The immediate impact of the falling stock markets is being felt in the value superannuation account balances as many superannuation funds invest heavily both in the Australian and international stock markets. A similar trend also occurred during the financial crisis of 2008/2009 with superannuation funds being hit hard by the big downturn in the stock markets at the time. As a result of falling stock prices and declining super fund balances, there was an eventual upswing in property investor activity as investors took advantage of low-interest rates back to buy a property.

The reality is that property like gold is viewed as a safe investment option during a time of global financial uncertainty.

With the RBA dropping interest rates at its March 2020 meeting by 0.25% and expected to drop them again in April, these very low-interest rates should again entice more people to invest in property over the coming year.

This is particularly the case in regions of Australia where property values are still relatively affordable and yields are high such as Queensland, Western Australia, and South Australia. The positive returns delivered by investing in property is a key reason why one in five Australian homeowners now own at least two properties.

Overall, figures from the Australian Bureau of Statistics show that 21% or one in five households own a property other than their own home.

This figure is set to increase even further as a result of the Coronavirus as people investing for their retirement decade to move to the safety of property investment away from higher-risk options such as the stock market. The tax benefits associated with property investment will also encourage more people to buy investment properties on the back of the Coronavirus scare.

Property investing still allows people to claim generous tax benefits associated with negative gearing as well as depreciation.

The tax benefits associated with tax depreciation can be very significant with DEPPRO clients achieving tax benefits obtained through depreciation equivalent to 60% of the total purchase price of the property. To qualify for these legitimate tax deductions, an investor must have a fully compliant tax depreciation company undertake an onsite inspection of the property and then compile a depreciation report based on this inspection.

Property investors should, therefore, check that the company undertaking their tax depreciation schedule is a member of The Australian Institute of Quantity Surveyors (AIQS).

Employing a company that is a member of AIQS such as DEPPRO gives protection to consumers that their tax depreciation report complies is completed in a professional manner.

If we asked you to name the fifth biggest lender in Australia, you'd be forgiven for naming one of the big four banks. But according to new Mozo research, the answer lies a little more close to home.

Mozo data has revealed that the Bank of Mum and Dad still holds the title as the fifth biggest home lender in the country and are lending an average of $73,522 to help their children take that first step on the property ladder - nationally, that number skyrockets to $92 billion and is up 41% from 2017. When Mozo first investigated the Bank of Mum and Dad, total national lending by parents reached $65.3 billion and saw 29% of parents giving their child a leg-up onto the property ladder.

According to a Domain property report that was released in April 2019, the average median property price in Sydney sat at an eye-watering $1,027,962. What's even more disheartening is that property prices haven't slipped below $1 million since 2015, making settling down to have a family all the more challenging.

"The property market in Australia is incredibly challenging for younger generations to break into property prices surging by 395% in the last twenty-five years. For this reason, the Bank of Mum and Dad has become an essential player in our nation's housing market," said Mozo Director, Kirsty Lamont.

"Loan contributions have grown by 41% in the last two years along highlighting that the Bank of Mum and Dad will not be closing shop anytime soon."
The Bank of Mum and Dad now sits behind the big four banks, CommBank, ANZ, NAB, and Westpac, but still ahead of major lenders, ING and Suncorp.

How the Bank of Mum and Dad are footing the bill (and paying the price)
They say the love a parent has for their child holds no bounds and to give their child a chance of having a place to call their own, Aussie parents are pulling out all the stops.
The research revealed that 64% of parents dipped into their own savings to come up with the funds, 34% cut back on expenses and a small 16% used cash from their home's equity.

"Many parents are feeling the pressure to help their children purchase their first property and for some, this is causing a real strain, especially when they find themselves working for far longer than they'd envisioned or repayment deals are reneged on," said Lamont.
Allowing adult children to live at home rent-free still remains the most popular way of providing assistance, with 43% of Aussie parents doing so. 32% said they provided money for a deposit, 14% acted as a guarantor and 10% assisted with home loan repayments.
Purchasing property on behalf of their child or as a partner were less popular methods, sitting at 9% and 6%, respectively.

For many parents, handing over their savings came with no strings attached, as the majority of parents did not expect repayment from their children.
But for those that did ask for repayment, almost 20% admitted they are still waiting for their reimbursement, potentially causing a rift between families.

And for some families, chasing down repayments is the least of their troubles, as one in four parents revealed they were at risk of financial hardship and stress as a result of their generosity.

"With one in four parents providing assistance are at risk of financial hardship, the path to property ownership is less than rosy for many families," Lamont warned.

And unfortunately, the "path to property ownership" is filled with a few speedbumps.
Of those parents who acted as guarantor for their child, more than a quarter (26%) reported that their child had defaulted on their loan, which resulted in a call from the bank. One in five parents who had an agreement with their child to make repayments said that they had missed their deadlines.

Parents covering more than just the property

To give their children the best chance to save up, some Aussies parents are providing financial assistance by any means necessary. Almost half (46%) of parents had contributed toward purchasing a vehicle for their children, followed by helping with educational costs (39%), ongoing bills (33%) and picking up the cost of household items, like beds or couches (27%).

What does the future hold for the Bank of Mum and Dad?

As property prices are expected to increase in major cities across the country this year, it won't be long until many young Aussies find themselves turning to their parents for help.
With the Bank of Mum and Dad already experiencing a 41% increase within the last two years, it's possible that we could see this number continue to climb and potentially one day take out the top spot as Australia's biggest lender.
And according to Lamont, the Bank of Mum and Dad's growth as a lender may be due to a wider imbalance within the Australian economy.

"It could be argued that such dominance in family assistance is feeding into a greater inequality in this country with many first home buyer hopefuls without financial aid remaining locked out as property prices rise faster than they can feasibly save a deposit," she said.
"Income to property ratios have changed dramatically in the past twenty-five years. At present, the cost of buying a property is 7.2 times the annual income of a typical household, whereas 25 years ago it was 1.6 times the annual household income."

Source: Mozo

On Tuesday (3 March), the Reserve Bank of Australia (RBA) lowered the official cash rate by 25 bps from 0.75 percent to 0.5 percent - marking the fourth cut since June 2019 when the easing cycle commenced.

This followed a sharp turnaround in sentiment ahead of the RBA's monetary policy board meeting, with analysts initially expecting the central bank to keep rates on hold.

Developments in the domestic and global economy are likely to have altered the RBA's tone, with weak local market indicators and the coronavirus (COVID-19) outbreak rattling market confidence.

Lenders, including all four major banks, have already begun repricing their offerings in response to the cut.

ING, Macquarie, Suncorp, and BOQ are the latest among several lenders to reprices their offerings.

ING

ING has passed the full 25 bps reduction to its home loan customers, with changes applying from 18 March for all new and existing variable rate customers.

The non-major's variable rates will start from 2.74 percent.

Macquarie

Macquarie has lowered its variable mortgage rates by 25 bps, with changes effective 19 March.

Macquarie's variable rates will start from 2.84 percent.

Suncorp

Suncorp has cut home loan rates by the full 25 bps, effective from 20 March.

The lender's rates will start from 2.78 percent.

BOQ/Virgin Money

BOQ and its subsidiary Virgin Money have opted not to pass on the RBA's cut in full to owner-occupiers, who will only receive a 17 bps reduction to their home loan.

However, BOQ and Virgin have reduced investor home loan rates by the full 25 bps.

The changes are effective on 3 April.

ME

ME has passed on the full 25 bps to both its owner-occupier and investor customers.

The lender's changes take effect on 26 March.

Citi

Citibank has responded in kind, cutting variable rates for all new and existing mortgage customers by 25 bps, with the exception of lines of credit.

Citi's changes will take effect on 24 March.

Bankwest

In line with its parent company, the Commonwealth Bank, Bankwest has reduced variable home loan rates by 25 bps, effective 18 March.

Bankwest's variable rates will start from 3.32 percent.

Auswide Bank

Auswide has reduced rates on its RBA Rate Tracker home loan by 25 bps, effective immediately.

The bank's variable mortgage rates now start from 2.99 percent.

UBank

Like its parent company NAB, UBank has reduced rates by the full 25 bps, effective 3 April.

Its rates will start from 2.59 percent.

Mutuals and non-banks

Newcastle Permanent, The Mutual, Defence Bank, Greater Bank, and Baxter Credit Union have also reduced their rates by the full 25 bps.

RACQ Bank joins BOQ and its subsidiary Virgin Money in falling short of a wholesale 25 bps reduction, reducing rates by 17 bps.

Non-banks Firstmac, Liberty, and Freedom Lend have passed on the full 25 bps cut.

Source: Mortgage Business

*WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

We have streamlined the application process for the RESI Renew/ Restart range. You all should have received your new accreditation code for this product which will unlock all-new improvements.
These improvements include:

• Streamlined application process to mirror Pepper direct
• Applications go directly to pepper, bypassing our triage process, improving SLA
• Dedicated white label support, credit, scenario and post-settlement team.
• Alignment of the rate card to be more competitive than the retail channel.

We also conducted a webinar to address all of the above and to go through the Pepper niches. Click on the link below to view the webinar.

RESI Renew/ Restart range Webinar

If you got an email from the World Health Organization relating to the coronavirus outbreak, would you open it? Would you download attachments and click-through links for more information and maybe provide some personal details that you believed would protect you and your family? Cybercriminals believe that some, if not most of us will.

Since the start of this year, we've seen increased coverage of the coronavirus (officially known as COVID-19). However, public health is not the only threat; criminals are looking to capitalize on the fear and uncertainty caused by the outbreak to fuel fraudulent activity designed to steal personal information and money and infect computers with malware.

Over the years, fraudsters have become more sophisticated, using social psychology and topical ploys to trick consumers who have likewise become more sophisticated and better at avoiding more common scams. Recent examples of phishing emails demonstrate this in practice.

At first glance, this could easily be mistaken for a legitimate email from the WHO. The subject line is intentionally alarming and designed to encourage the recipient to open it. The logo and domain used also add credibility. The numerous scams have prompted the WHO to release an advisory notice urging people to be vigilant.

There have also been reports of phishing attempts aimed directly at businesses. The emails have directed recipients to download a Microsoft Word document for more information. Once downloaded the Word file activated malware, allowing the attackers to access sensitive data.

"The malware actors doing this....... clearly understand the economic concerns surrounding the Coronavirus," Sherrod DeGrippo, Proofpoint's Senior Director for Threat Research and Detection, wrote in a blog post.

This rise in these scams has also caught the attention of regulators. In China, the China Banking and Insurance Regulatory Commission (CBIRC) announced that domestic banks have received multiple complaints about the "false information on the disease situation to defraud or harm the interests of consumers." There have been a variety of cases including emails to victims telling them of transport and hotel cancellations. Victims are encouraged to click on links or phone numbers to receive refunds, which are then used by fraudsters to obtain sensitive information.

The Monetary Authority of Singapore (MAS) has also issued a statement that its officers would never ask for personal banking information or security login credentials from members of the public. This statement was made following reports of fraudulent calls, impersonating

MAS staff, requesting personal or bank details. The phone calls often involve notifying the receiver that their bank account has been locked or suspended. The victim is then asked to provide information such as their internet banking user ID and password.

It is likely that criminals will continue to use times of heightened sensitivity for their own fraudulent gains, however, there are things that you can do to protect yourself and your organization:

• Never disclose personal details, including those relating to your bank account over the phone. Double-check who is calling you and even ask to have a number to return the call to verify legitimacy.
• Email addresses can be easily spoofed and at first, a glance may look like they originate from legitimate-looking domains. Do not be fooled by the sender's name.
• Read the messages carefully, typos and spelling mistakes should be treated as red flags.
• Examine the URL before clicking on it, especially if you've received it through a random email sent directly to you. Try and navigate to the webpage yourself from the organization's homepage, or via Google.
• Never enter your personal credentials when an email re-directs you to a web page or document for downloading.
• Be wary of any communication that tries to make you act on impulse, by rousing strong emotions of alert or fear.
• If you believe your password has been compromised, change it immediately, and be sure not to use the same password on more than one site. Where possible, use 2FA as an added layer of protection.

As an ISO27001 certified company across all systems and locations, ComplyAdvantage wanted to end on some practical tips of what they do to protect themselves and their customers.

Security awareness. All staff have met training requirements to a high standard and have been effectively communicated to on a regular basis on practical ways they can help to look out for these security breaches.

Reminding our employees and clients that any of their team will not ask for any sensitive account details over email. It's an essential bit of information and practice but that's where the easiest mistakes are made.

In-house simulated phishing attacks. Their Information Security Team conducts monthly simulated phishing attacks on all of our staff including the C level and extra positively-driven training is given to those that need it.

Senior Leadership Team commitment. Their SLT are fully engaged and proactive in the Information Security program and meet on a regular basis to discuss and mitigate the risks facing the company, their clients and their supply chain.

Phishing alerting functionality is built into browsers to enable employees to report phishing to the Information Security team immediately and effectively.