Government Relaxes Responsible Lending Options

The government has announced a relaxing of responsible business lending obligations in order to ensure small businesses can access credit quickly and efficiently in the coming months.

As it stands, responsible lending obligations don't apply to lending predominantly for business purposes; however, for a loan to fall within this exclusion, a lender is required to undertake due diligence to confirm the money borrowed meets this test.

Now, the government is changing this by providing an exemption from responsible lending obligations for a period of six months. Credit lenders can extend these to their existing small business customers so long as:

  • There is an existing borrowing relationship
  • Some proportion of that credit is used for business purposes

The exemption will apply to new credit, credit limit increases and credit variations and restructures.

The government recognises that "The environment for small business has and continues to change due to rapidly-evolving challenges posed by the coronavirus".

The revision is intended to enable lenders to move quickly to support small businesses, at a time when prompt action has become more crucial than ever.

Credit providers regulated by APRA will remain subject to APRA's prudential standards while the exemption applies, and providers who subscribe to an industry code will remain obliged to abide by that code.

The Morrison Government has promised it will continue to work with the banking industry and the financial regulators to support Australian jobs and businesses moving ahead.

Source: Broker News

An Update from Pepper

This is an uncertain time, but please be assured that Pepper is taking active measures to support their brokers and customers. The team is all working hard to ensure they keep giving you the service you know and expect.

A few items that have been raised are around non-face to face identification, hardship, and valuations which have been provided with clarity below,

  • Pepper Money will continue its business process of allowing non-face to face customer interactions with VOI identification via Zip ID or Australia Post. They are also working on digital verifications should the current VOI options become unavailable and will enact this immediately in need.
  • Pepper is also working to provide a valuation solution that should access securities to become problematic. More details will be provided prior to the enactment of this change if it comes to it, but rest assured this is well in hand.
  • If customers are experiencing financial difficulty as a result of Covid-19, there are a number of options available to them. Customers should get in touch with the Pepper Team on 1800 356 383 to talk about financial relief options available to them in a confidential manner. The sooner a customer contacts, the sooner their hardship team can work on a plan to help improve the situation.

An SMS campaign has also been started to all customers from the afternoon of 18th March.

Pepper will continue to work with all their introducers to facilitate access to Pepper and all your continuous support is greatly appreciated.

COVID-19 Update From ING

With the continued spread of the novel coronavirus, ING is committed to ensuring the health and wellbeing of their staff and business partners, whilst also providing support to allow their network to continue working with ING.

Needless to say, the health and safety of everyone is a priority so recommendations from the Federal and State health departments in terms of practicing hygiene and other proactive measures to protect against infection are being followed.

Client Meetings & ID Process

ING does not require accredited brokers to perform client meetings face-to-face, and various means (including technology solutions) can be utilised to complete client interviews.

On the customer identification front, the ING Customer Identification Procedure for Brokers currently supports the following methods to enable clients to be identified in accordance with the terms of the Introducer Agreement:

  • Where a face-to-face interview between the broker and client is possible - By completing a current ING Identification form
  • Where a face-to-face interview between the broker and client is not possible - Via any Australia Post

Effective immediately, where a face-to-face interview between broker and client is not possible, ING will also allow clients to be identified via Zip ID. ING has an arrangement in place for Zip ID to carry out mobile face-to-face identity verification as ING's agent. More information about Zip ID can be found at

Zip ID may be used in the same circumstances in which Australia Post identification is permitted under the ING Customer Identification Procedure for Brokers. In order to utilise this option, brokers will need to register for Zip ID credentials via ING. Those credentials will give the broker access to the Zip ID portal that allows them to arrange the appointment between Zip ID and the client for the purposes of face-to-face identity verification. Registration instructions will be provided in an email to accredited brokers shortly. The addition of this option is effective immediately and now available to accredited brokers.

Separate communication will be available to brokers, advising them to contact their aggregator if they are unsure whether the above aligns with their guidelines on client interactions and ID procedures.

Falling Interest Rates Combined with Stock Market

The decision by the RBA to cut interest rates for the second time in March should give a major boost to the property investment market in Australia.

With official interest rates now just sitting at just 0.25% combined with a $100 billion injection of new liquidity by the RBA and the Federal Government into the banking sector, borrowing money for a home loan should become easier for property investors as well as owner-occupiers moving forward.

However, an even more significant boost to the Australian property market will be investors fleeing the stock market and investing in real estate as a result of the Coronavirus-driven crash in the international stock market over the last few weeks.

Historically, the property market benefits from a crash in the stock market as investors seek safety for their money such as real estate.

For example, following the stock market crash in 2008 as a result of the Global Financial Crisis, property prices began to surge in Australia.

As the RBA slashed interest rates to contain the emerging financial crisis - falling to 3 percent by April 2009 - Australian house then prices started to rise.

In the March 2009 quarter, the national median house price edged up by 0.1 percent, before jumping 3.5 percent in the June quarter, another 3.9 percent in September and a strong 4.6 percent in the three months to December 2009.

This pick-up-in-house prices was mainly driven by investors moving their money out of the stock market and into the property as well as lower interest rates.

And this increase in property investor activity at the time was reflected by a large increase in tax depreciation reports undertaken by DEPPRO for new clients who had purchased investor properties following the stock market crash.

A similar trend occurred following the stock market crash of 1987.

Following the 1987 stock market crash, the quarterly rate of capital gain for property rose from 2.9 percent in September 1987, to reach a record high rate of quarterly growth less than a year later at 9.6 percent over the three months ending July 1988.

After the 1987 stock market crash the ASX All Ords Index took 76 months to stage a nominal recovery in value but over the same period, national dwelling values rose 58.5 percent.

The latest cut to interest rates will be an additional driver to the property market that was missing in 1987.

This is because, in 1987, investors have the option to put their money into the banks as interest rates were high - the standard viable home loan rate was around 15 percent in 1987.

Today, with interest rates at now a record low, the option of putting money into a bank savings account is just not financially viable for investors with the paltry returns now at less than the inflation rate.

Another factor driving the Australian property market over the coming months will be the significant decline in new dwellings construction over the past year and we are already seeing that impacting on the property market with falling vacancy rates in many parts of the country.

All of these factors are now combining to help give a major boost to the property market during 2020.

Deposit Power: Lender Update

With the Corona Virus currently impacting the usual operations of many businesses, we wanted you to know Deposit Power is open for business 24/7 with our online system where you can apply and secure a decision online in real-time.

In these 'COVID-19' times, to avoid the need of meeting with a client to get an application form signed, you can also take advantage of our paperless and signatureless application process for short term guarantees.

Deposit Power continues to operate from our offices in George Street, Sydney with some staff attending the office and others working from home.

If you need support or have any queries, please contact us on our helpline 1800 678 979.

So rest assured, whilst things are rather unusual at the moment, it's business as usual at Deposit Power.