ACCC warning echoes AFG’s call for competitive market

AFG today said the ACCC’s Residential Mortgage Price Inquiry report has provided damning evidence of the major banks “synchronising” interest rate increases, underlining the importance of ensuring a competitive home loan market.

AFG chief executive officer David Bailey applauded the ACCC’s conclusion that consumer choice and lower interest rates on offer from smaller lenders competing with the major banks would be threatened by any regulatory measures that affect the role of mortgage brokers.

“The ACCC has highlighted how important the role of mortgage brokers is in creating a market where consumers are offered the widest choice of lenders at the lowest prices,” Mr Bailey said.

“If Australia’s competition watchdog has concluded that the pricing of mortgages in Australia is opaque, how are consumers expected to navigate the variety of home loans without the assistance of their local mortgage broker?”

The ACCC report found the four major banks dominate the Australian lending market, underscoring why a viable mortgage broking market is crucial for retaining competitive pressure.

AFG pointed to the ACCC’s finding that lenders offering the best deals for consumers by competing on price rely heavily on mortgage brokers to gain market share. The ACCC warned that these lenders, responsible for the competition in the home loan market, “are likely to be more vulnerable to future regulatory changes that affect the use of brokers as a distribution channel.”

Mr Bailey said the ACCC’s report would be considered by policymakers in preparation for the regulatory response to the Royal Commission into Banking and Financial Services. The ACCC report means the nation’s competition authority has joined Treasury and the Productivity Commission in demonstrating the benefits to consumers of a competitive home loan market.

“In a world where we have the ACCC declaring that Australia’s home loan market is lacking competition, price leadership is effectively as damaging as actual collusion.

“This is why mortgage brokers are so important. It would be unfathomable for policymakers to consider taking steps which would limit competition by impacting the very channel that has been increasingly embraced by consumers for the competition and choice the channel delivers,” Mr Bailey said.

Final RBA announcement for 2018 leaves cash rate Unchanged at 1.5%

As widely anticipated, in the final rate announcement for 2018, the Reserve Bank of Australia has left the official cash rate unchanged at 1.5% for the 27th consecutive time.

The RBA continues to balance the positive parts of the economy including strong infrastructure spending, increased export earnings and 5% unemployment with some of the negative economic indicators such as a turn in the housing cycle, decreased consumer spending, tighter credit conditions, weak wages growth, below target inflation and share market volatility.

With lenders continuing to review rates independently of the RBA, it is important to review your lending options regularly to ensure they remain the most suitable for your situation. There may be different rates available from our wide panel of lenders and an AFG broker is? always available to ensure you have the right financial solution for your current and future circumstances.

If you’d like to have a chat about what today’s news means for you and your finances, please don’t hesitate to?get in touch with an AFG broker.

Don’t let the spirit of Christmas drive you to the brink

Christmas is a magical time of year but it’s all too easy to get caught up in the holiday hysteria and end up spending much more than you intended on family, friends and even yourself.

We’ve put together a set of tips to help you avoid breaking the bank and falling into debt, making your festive season a little less stressful.

  1. Create a budget and…well, don’t budge. Seems simple enough, but it’s easy to get caught up in the moment and overlook your spending and fall too far into debt.
  2. Put together a list of people you want to spend money on, and then add possible gift items against each person. Then, stick to it. It’s essential to avoid impulse buys but if you have a pre-considered list and do not deviate from it, it will go a long way to helping you avoid buying inappropriate, overpriced items.
  3. Go it alone. While it’s nice to go shopping with someone, sometimes it can be an extremely bad idea as items you’ve never seen before can inexplicably appear at the sales counter. Shop alone and stay focused on your list.
  4. Start early and shop around for the best deal. Remember the closer you get to Christmas the less likelihood of finding anything on special. It’s easy to get caught up in the frenzy of Christmas shopping. When everyone is madly fighting to get their hands on the latest electronic gizmo, it’s hard not to feel you need it too. Be smart and do your shopping during the quiet period so you can keep a clear head and steer clear of the mania.
  5. Keep an eye out for price-matching stores. Many retail outlets will offer to match the price of another store and then offer a 5-10 per cent discount on top of that.
  6. Shabby chic décor is still really popular so consider hitting vintage or second-hand shops to find pre-loved items. It’s good for your wallet, and great for the environment in this age of excess. If you’re handy, you might even be able to upcycle an op shop treasure to take it to a whole other level and make it truly one of a kind.
  7. Get crafty and make your own gifts. They will come across as decidedly more heartfelt thanks to the effort you’ve put into making them. Mine the internet for ideas – there are thousands on offer (start with Pinterest)! For example, if you’re gifting to someone that loves to bake, make them your own vanilla extract, which is as simple as combining vanilla beans and vodka for a few months of steeping, before dispensing into cute little glass bottles and labelling – bingo, you have a one-of-a-kind gift for the cook in your life.
  8. Check online – the same item you can purchase instore can generally also be found online – and it may be cheaper and free postage is frequently on offer. Also keep in mind that a local store might be open to price matching something you see online, so that you can shop local and keep your hardearned in the local economy – it never hurts to ask.
  9. Put a small amount of money aside each week of the year so when you hit the Christmas shopping period you have a ready-to-go gift fund that won’t eat into your bank balance.
  10. Try not to use credit when buying presents. The repayments can be crippling, and you can end up in a debt spiral that is hard to get out of. If you can’t shop without the plastic, the op shop and handmade tips included in this list could instead be your best friend. Giving an amazing gift doesn’t necessarily have to involve big dollars – think clever.
  11. Secret Santas are perfect when you don’t want to over-spend or feel guilty because another family member has. Set a budget that everyone can afford and buy just a single gift, rather than for everyone in the family. This is both a money and sanity saver!
  12. Get creative with decorations. Consider solar lights outside instead of electric and make your own festive decorations for the tree and around the house – again, jump onto Pinterest for a gazillion homemade decoration ideas.
  13. Regift. Got something that wasn’t quite you last year? Wrap it back up and give it to someone else the following year – just be sure you don’t give it back to the original giver!
  14. Who really loves Christmas the most? Children, of course. So rather than buying for everyone in the family, sit down and talk about spending on just the kids. The adults will probably be relieved.
  15. Make your own cards from family photos. It’s more heartfelt and a lovely keepsake for the recipient.
  16. Hold a garage sale prior to Christmas to fund your spending during the silly season. The national Garage Sale Trail is positioned perfectly in the leadup to Christmas for a reason!
  17. When it’s time to buy the Christmas grub, eat first unless you want a trolley filled so full the fridge will overflow. Think about your wallet and your waistline!
  18. Think about all your past Christmases… was there a lot of leftover, wasted food? Let’s face it, no one really likes brussels sprouts, do they? So, before you set out for the supermarket, think carefully about what will really be eaten and enjoyed and don’t add anything to the shopping trolley because you think it’s the ‘must have’ Christmas fare, especially if no one likes it.