Archives April 2024

ANZ has launched a pilot mortgage product that offers special deals to borrowers in 145 select postcodes, primarily in wealthy areas of Sydney like Double Bay, Rose Bay, and Bronte. 

The new mortgage product is targeted at high-income borrowers, requiring a minimum income of $400,000. Borrowers can take out loans between $5-8 million without needing mortgage insurance, and the loans can be structured as interest-only. 

The rates on these loans are about 0.35% higher than the broader mortgage market, but the customized nature of the deals is meant to appeal to the wealthiest borrowers. 

This move by ANZ is seen as a way for major banks to carve out the richest borrowers and offer them exceptional deals, in response to tighter regulations from the prudential regulator that have restricted banks’ ability to expand their loan books. 

The pilot is being tested by mortgage brokers this month, and the banks are using new analytics to identify the wealthiest postcodes to target with these exclusive mortgage offerings. 

Experts note this will further segregate the mortgage market, with the wealthiest borrowers getting access to specialized products not available to the broader market. There are concerns this could create a “perennial advantage” for the rich, as interest-only loans can be passed down through generations. 

Overall, the article portrays this as a strategic move by major banks like ANZ to cater to their wealthiest customers in the face of tighter regulations, potentially widening the divide between the mortgage options available to the rich versus the general population. 

Source: The Australian

NSW Fair Trading last May established a dedicated underquoting team to address “rising concerns” about the practice. This practice is harming the income of Mortgage Brokers.

Underquoting by real estate agents is becoming more frequent across Australia as a lack of regulation and weak enforcement frustrates those in the property market and forces up prices, according to industry figures.

• Underquoting by real estate agents is a pervasive issue across Australia, particularly in Sydney, where aspiring first homebuyers are often left with wasted time and money due to unrealistically low price guides.
• NSW Fair Trading has established a dedicated underquoting team to address concerns about the practice, but fines for agents are topped at $22,000 for those found to have knowingly underquoted, which is considered a paltry fee by industry experts.
• The lack of enforcement is encouraging more agents to mislead customers, and the lack of regulation is driving up the price of pre-emptive fees such as conveyancing, building permission planning and application costs, consultations with lawyers, and renovation quotes from builders.
• Buyers agents, who assist prospective homeowners in finding suitable properties, see underquoting happening more frequently and have seen it across competitive city housing markets.
• Mortgage brokers have closely monitored the commission lawsuit developments, as they believe the settlement could encourage housing professionals to pursue dual-licensing, which could lead to even more dark grey areas in RESPA compliance and potentially impact the mortgage industry.
• Consumer advocates argue that the practice of having the seller pay the buyer’s broker commission is best served when the seller pays, as it attracts the maximum amount of savings for both parties in terms of time and cost.
• Underquoting can slow down the home buying process for months as buyers end up wasting a lot of time trying to figure out their budget, and it is illegal in Victoria.
• To find out if a property is underquoted, buyers should look at realestate.com in the sold section on map view at properties that are similar with the same bedroom and bathroom count on a similar sized block and within a similar price range.
• Buyers need to do their own research and not assume that all agents underquote in the same way, and they should familiarize themselves with recent sale prices so that they can judge whether the agent is underquoting or overquoting.

Summary of article by the Australian

The mortgage industry in Australia is undergoing a significant transformation driven by the rapid advancements in artificial intelligence (AI) technology. While mortgage brokers have traditionally played a crucial role in the lending process, there is a growing consensus that AI will eventually replace their services, and this is a positive development for both borrowers and the industry as a whole. The question seems to be not if, but when AI will replace mum and dad style Mortgage Brokers.

One of the primary advantages of AI in mortgage brokering is its ability to process vast amounts of data quickly and efficiently. AI-powered platforms can analyse a borrower’s financial profile, market trends, and lending criteria with unparalleled speed and accuracy, significantly reducing the time it takes to evaluate loan options.

This efficiency translates to a faster and more streamlined loan approval process, benefiting borrowers who no longer have to wait weeks or even months for a decision. Moreover, AI-driven systems can provide personalised loan recommendations that cater to the unique needs and preferences of each borrower without external influences affective the decision. These algorithms can navigate complex financial scenarios, such as self-employment or unique income sources, which may have previously required the expertise of a human broker.

By automating these tasks, AI can deliver a more consistent and reliable service, ensuring that borrowers receive the most suitable loan options without the need for human intervention.Importantly, the replacement of mortgage brokers by AI does not mean the loss of the “human touch” in the lending process. AI-powered chatbots and virtual assistants can provide empathetic and personalised support, addressing borrowers’ concerns and guiding them through the emotional journey of purchasing a home.

Additionally, the automation of routine tasks allows human brokers to focus on building stronger relationships with clients, providing tailored advice, and navigating complex legal and regulatory requirements.Furthermore, the use of AI in mortgage brokering enhances accountability and transparency. With AI-driven systems, the decision-making process becomes more transparent, and borrowers can have a clear understanding of how their loan applications are evaluated. This level of transparency can help build trust and confidence in the lending process, ultimately benefiting both borrowers and the industry as a whole.

In conclusion, from the borrower’s prespective, the replacement of mortgage brokers by AI in Australia seems to be a positive development that will streamline the lending process, provide more professional and efficient services, and enhance transparency and accountability. As the mortgage industry matures and continues to evolve, the integration of AI technology will undoubtedly play a crucial role in shaping the future of home lending in Australia. Now is not a good time to start a career in Mortgage Broking or Real Estate.

Source: Industry spokesperson

A Brisbane couple has been left with nothing after taking out a loan with a second-tier lender. They say they were pushed out of their home. Now, lawyers are fighting to recoup the equity of the property alleging the deal was unlawful.