NAB's May 2020 Report

In this month's NAB report, the following insights and forecasts have been shared:

  • Forecasts for global GDP have been revised and is now expected to be -3.8% in 2020 (was -2.8%) and +6.5% in 2021 (was 6.6%), reflecting some further escalation of containment measures (notably Japan) and only a gradual easing of restrictions in other economies, coupled with ongoing household and business caution.
  • The forecast changes don't alter the overall picture - there has been a huge fall in activity across most of the world; in China, it was centred in February but in many other economies it occurred over March/April. The fall in global GDP in 2020 is likely to be the biggest fall in since least since the 1950s, and most likely since the Great Depression.
  • Global activity likely hit bottom in April; many countries have, or are in the process of, easing containment restrictions even if only gradually. While an easing in containment measures - if sustained - will likely lead to bounce inactivity, a full recovery from the downturn is likely to take an extended period for many. This is due to the damage to household/business balance sheets, as well as to government finances, the closures of many firms being permanent, and long-lasting structural changes to economies. Moreover, there is a range of risks that may slow or reverse any recovery, including that of further major outbreaks of COVID-19, financial market stress (with some EMs at risk of de-stabilising capital outflows), or a flare-up in geopolitical tensions.
  • The extent and speed of the decline in activity are highlighted by the US labour market. In February, the unemployment rate was at a 50-year low - two months later it is at its highest level since the series began (1948). Similarly, Canada's unemployment rate jumped to 13%. For other countries - such as Germany - government wage subsidy schemes have minimised the jump in measured unemployment, but this only hides the extent to which there are a lot of people who were meaningfully employed a few months ago doing relatively little (although by retaining a link to work such schemes may assist the recovery).

For further details, please see the attached document.

To listen to the podcast, click here.

Australian Mortgage Awards

The Australian Mortgage Awards, the premier independent awards for the mortgage industry, is back in 2020.

After an unprecedented year, it's time to recognise the outstanding professionals and organisations - brokers, brokerages, aggregators, lenders, BDMs and more - who thrived in such a challenging climate.

Have you raised the bar over the past year? Or do you know someone who has? Nominate for all 29 categories here.

Finalists will be announced and promoted across Mortgage Professional Australia (MPA) and Australian Broker magazines and online channels. Winners will be revealed at the celebratory award show on 16 October and profiled in MPA magazine.

We look forward to your nominations and to celebrating those who make this industry great!

Nominate Now!

Nominations close on June 26, 2020.

MoneyPlace's Commission Update

Please find attached the updated Addendum for MoneyPlace, where the following changes have been made:

  • Lender Assistance Fee (Brokerage) has been increased from $975 to $990.
  • Repayment of Commission has been updated to only apply if the client is in default within 6 months from settlement.

These changes are in effect from the 1st of June.

The updated servicing calculator has also been attached, should you wish to share this with the team that updates the system - the brokers can access this in the MoneyPlace portal under resources.

Updated Addendum

Updated Calculator

CommBank Update

As of Friday, May 29 CommBank has made the below changes to their Home Loan Switching Terms & Conditions.

Temporary one-year Interest Only (IO) & Interest In Advance (IIA) to support customers due to the broader impacts of Coronavirus.

CommBank is temporarily allowing existing customers to apply for a one-year IO and IIA switch/ extension without requiring a serviceability assessment, when:

  • They are not in arrears
  • They are not in financial hardship
  • They are not participating in the Home Loan six-month repayments deferral
  • There will be a minimum of 1 year remaining on the contracted loan term at the expiry of the proposed IO term
  • The loan account has been funded for a minimum of 180 days.

Commonwealth is additionally taking the following extra measures in order to support this temporary change.

  • Provide a new process including the requirement to ask mandatory responsible lending questions outlined in CommBroker
  • Update the Loan switching request form 001-070 to include a new IO repayment amount section and declaration statements
  • Update NetBank to allow either to operate customers to switch from Principal & Interest for one-year IO switch requests.
  • Change the customer's interest rate to the applicable higher rate of interest during the interest-only period
  • Review the change periodically.

As your customer's broker, you will have 3 options available to support them:

  • NetBank One-year IO Switch/Extension Requests
  • Interest Only Switching Team - 1300 057 072 (8 am - 6 pm M to F AEST)
  • Loan Switch Request Form.

Customers participating in the Home Loan six-month repayments deferral

Customers participating in the Home Loan six-month repayments deferral who are no longer in financial hardship are eligible to apply for a one-year IO and IIA switch/ extension. They must:

  • Call Financial Assistance Solutions, 1300 720 814, to cancel their deferral
  • Once the deferral is cancelled, they will then be eligible to switch to one-year IO/ IIA.

For any customers requesting an IO or IIA switch/extension for more than one-year, follow the standard process.

Improving Houses in Australia

One of the great pay-offs for the JobKeeper calculation error might be a proposed Federal Government grant of up to $40,000 for home renovators that could help provide work for an estimated 58,000 tradies who've seen work dry up since the Coronavirus came to town.

Building industry experts say around 70,000 tradies have been put into hibernation and this proposed $4 billion spend to get homeowners spending is seen as a good idea.

Gotty asks why to throw more money at the sector but it seems more likely that the promised $40,000, which we have no details about yet, will be targeted at a more substantial renovation compared to a DIY weekend effort after a trip to Bunnings.

An AFR story today cites tradies who say clients' jobs have been put on hold because of the uncertainty linked to what COVID-19 threatened for the economy and jobs.

For those out there who worry about our internationally high household debt, if 100,000 homeowners secure a $40,000 grant and increase the value of their homes, then they'll have more valuable assets, which reduces any potential problem of negative equity, where the value of the home is less than the loan behind it.

To read the full article, click here.

Macquarie's EOFY Campaign

With the end of the financial year fast approaching, Macquarie is coming up with a special offer for existing commercial clients who are thinking about upgrading their commercial vehicle's.

For a limited time only, these clients can now have the opportunity to upgrade their commercial vehicle loan, without all of the normal payout costs applied, when they take out a new Macquarie commercial loan.

With competitive rates starting from 2.85% for a property owner financing a 2019 or 2020 vehicle with an LVR 90%, it could be a great time for your clients to upgrade or replace their commercial vehicles or equipment.

Additionally, this streamlined replacement policy means a faster experience for you and your clients.

What you need to know

To take advantage of this offer, your clients will need to be an ABN holder, and have a satisfactory credit history with no accounts in arrears, and not currently on a payment pause.

As you may be aware, the Australian Government has increased the instant asset write-off threshold for eligible assets to up to $150,000 for eligible business. To find out more, your clients can visit the ATO website or speak with their accountant.

How to help your clients take advantage of this offer

  • Reach out to your existing Macquarie commercial clients today to let them know about this fantastic offer.
  • Call Macquarie to get a reduced payout figure for your client through their Introducer Service team on 1800 005 046 (then select option 1).
  • Submit your application via Maclease utilising the replacement policy for streamlined approval.

Also, keep in mind about Macquarie's in-house car buying service Macquarie Vehicle Select. Their specialised team will negotiate a great deal for your client and ensure a seamless buying experience who are partnered with over 800 vehicle dealers across Australia to offer fleet pricing for your clients.

*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.