Important Changes - Empower Range of Loans

We are pleased to be able to announce some upcoming changes to the way upfront commissions are paid on the Empower range of loans.

The feedback has been clear, and as a result, part of these changes includes the removal of partial repayment clawbacks. In the coming months there will be a move towards paying upfront commissions on the loan account balance (net of any offset account balances) rather than the full loan limit.

Effective 1 December 2018, an interim solution will be implemented where we are paid commission on the loan account balance (net of any offset account balances), which will be calculated as at the last calendar day of the month the loan settles.

As part of these changes, partial repayment clawbacks (ie where the loan is not fully utilised within the first six months after settlement) will be removed from this date. Partial repayment clawbacks will still apply to loans settled prior to 1 December 2018.

There will also be an additional commission payment implemented. After 12 months, each loan account balance will be examined and an additional commission payment will be made on the difference between the current loan account balance (net of any offset account balances) and the loan account balance used in the upfront calculation (net of any offset accounts), as long as the amount is greater than or equal to $50,000.

What's being worked towards:

In the longer term upfront commissions on the loan account balance (net of any offset account balances) will be calculated at the 10th calendar day after settlement. We will provide plenty of notice when these changes are ready to come into effect.

What's not changing?

  • The way trail commissions are calculated is not changing.
  • For principal increases, we will continue to be paid after settlement based on the full amount of the increase.
  • Commissions on construction loans will continue to be paid on the full loan limit.
  • Commission clawbacks will still apply if loans are fully repaid and discharged early.

Should you wish to look at how this will work in practice, please click here for some examples.

The Importance of the Current Broking Model

Westpac CEO Brian Hartzer has noted the importance of the role that mortgage brokers play in the lending space, as he appeared before the House of Representative Standing Committee on Economics.

"We (Westpac) recognise that brokers are an important part of competition in the market and creating the perception for customers that they can see the market more effectively," the CEO said.

"Brokers provide price transparency, they provide a service in terms of convenience of going through paper processes and the like.

"In many cases, they (also) provide an ongoing relationship with the customer as circumstances change."

However, Mr Hartzer said that the bank is "certainly in favour" of more transparency in the broking industry and noted that a shift toward a fees-for-service model in the broking industry would be "worth considering".

"I've been on record saying that I certainly think it's worth considering whether brokers should charge customers directly and explicitly," Mr Hartzer continued.

However, he said that such a move would be "tricky", noting that it would raise questions as to whether a broker is acting as an adviser.

"(There) has been some questions about what the broker obligation to the customer is, and (whether or not) there should be more obligations there.

"We would say that it's worth considering, but the (answer) is kind of in the name 'broker'. They are essentially, on one level, a shopping service for the customer, helping them navigate as opposed to advising them explicitly about what they ought to do."

He went on to say that it was absolutely worth examining and that they (the bank) thought more transparency was a good thing.

Contributor - The Adviser.

Bank of Sydney Policy Updates

Please be advised that Bank of Sydney have made some changes to their forms, servicing calculator and lending policy as follows:

The changes to policy include;

  • Self Employed income calculations - clearer definitions added and included calculations
  • Changes to income documentation for PAYG - in most cases the NOA is no longer required
  • Changes to the Maternity Leave Policy - clearer definitions and calculations added
  • Revised Rental Income Calculations - new table added
  • Child Support/ Child Maintenance Policy - clearer definitions and calculations added
  • Changes to Living Expenses Calculations - New calculation added
  • Change to Notional Rent Commitment - New calculation added


Bank of Sydney have announced they will be advising further improvements to policy and products over the coming weeks, so keep an eye out for those. You may contact your Relationship Manager at Bank of Sydney to discuss further if required.

Maximise your EOY sales with Prospa

It's coming up to end of year, which is a peak time for Small Business activity. To help promote your small business lending product, Prospa is offering a suite of custom branded emails.

There is also the option of creating a branded landing page to help with lead capture.

If you have any questions, please call Propsa on 1300 904 808 or email partners@prospa.com.

Resi Update on the Resi Flexi Options

With interest rate movements happening on a regular basis, we thought we would highlight a handful of our Resi Flexi Options price points which represent great value for our clients and a great opportunity for you to win more business.

In terms of loans to investors, we have you covered no matter the scenario. Principal and Interest remains the more popular option now with sharper rates available - our rates are not honeymoon rates so we represent a good value option for regardless of how long your client wants to stay with us.

LVR < 80%

80% < LVR < 90%*

P&I variable investor rate

3.99%

4.26%

* LMI can be capitalised on top of the loan amount.

If cash flow is a priority for your client and Interest Only is still on the top of their list, while the rates are a little higher, these are among the best in the market, again, not a honeymoon rate. Once the Interest Only period expires we also help your clients by reviewing the rate back to a P&I price point at the time!

We also offer Interest Only investment right up to a 90% LVR!

LVR < 80%

80% < LVR < 90%*

Interest Only variable investor rate

4.39%

4.79%

* 90% hard cap for Interest Only lending.

Additionally, have some competitive rates for owner-occupied lending, so if you have an investor that needs to release equity from an Owner-Occupied property we have you covered there as well.

Rates are also available for construction and even bridging finance (fees apply), make sure you reach out to the team to discuss your next scenario!

Craig Herden - Relationship Manager E: Craig.Herden@resi.com.au P: 0478 537 841
Jason Hulbert - Relationship Manager E: Jason.Hulbert@resi.com.au P: 0468 755 419
Tony Wakim - Relationship Manager E: Tony.Wakim@resi.com.au P: 0416 409 100

Or e-mail our scenarios team on scenarios@resi.com.au

Download the Resi Rate Sheet Here

Check Out this Month's Property Report

The Australian housing market continued to weaken over the month, with national dwelling values falling 0.5% in September, marking twelve months of consistently falling values across CoreLogic's national hedonic home value index.

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