The Christmas Roundup

Good Morning and Happy Monday!

Many of you will already be on leave is preparation for Jolly Red blokes arrival in two sleeps time.

Even his impending arrival doesn’t stop the world from turning though.

No major changes in policy or rates this last week.

One of the stories I read last week, was proposed legislation changes around Buy Now Pay Later (BNPL) services like Afterpay. This type of lending it isn’t assessed in the same way a credit card or personal loan is. BNPL services were not targeted by the RC, though payday lenders were.

Peter Marshall from Mozo was quoted as saying, “The reason BNPL products aren’t covered by current credit regulations is their pricing structure – because they don’t charge interest on purchases, they’re not considered a credit product under the current regulations.”

My 20 year old daughter will hate me for saying this, BUT it cannot be a bad thing, especially given the way that many of these lenders throw money at young people like confetti, potentially seeing them in trouble with overloaded debt levels and the potential for credit impairment.

Other than the PM’s timely holiday, the big news came from The Treasurer and the economic outlook. I don’t think that this will have come of as much of a surprise. It has been very difficult for retailers who are usually a canary for our economy.

The delivery of this economic outlook was probably only saved by the record price iron ore exports have achieved. I think as many commentators and the RBA have mentioned, perhaps some stimulus is required from the government rather than relying on the reserve bank to provide the stimulus for the economy via housing sector.

In saying that the Australian Bureau of Statistics revealed increases in borrowing across the board. These increases won’t be solely due to rate reductions, also likely coming from the reduction in the servicing rate. As these figures are taken as a snapshot of the past it will be interesting to see what happens in the first quarter next year.

One of the biggest numbers was from borrowers refinancing, increasing for the fifth month in a row. This makes absolute sense especially when you look at the 8% jump in the October numbers for Investors. The investor space has seen some easing in policy, Loan to Value Ratio, servicing and others. If you or your clients haven’t performed a loan health check then it’s a great time to start. A health check costs you nothing.

With much of the East Coast still on fire and smoke affected, My thoughts go out to everyone affected by them. We are not out of danger yet. I hope that you and your families are safe and happy over this Christmas break.

Justin

Scenarios quoted above are suggestions and constitute general advice only.