Loyalty is an admirable trait when it comes to our friends, family and loved ones. But if you’re extending that virtue to the banks, then there’s a good chance it’s costing you thousands of dollars.

That’s the takeout from the ACCC’s latest Home Loan Price Inquiry interim report.

It shows that although interest rates charged by the big four banks on home loans fell during 2020, existing customers were stung by higher interest rates compared to newer customers, in no small part due to a lack of price transparency.

Price comparison confusion

The report found that the big banks’ home loan pricing practices make it pretty darn difficult for borrowers to compare different mortgage products.

That’s because the headline rates you see when you do your initial research don’t accurately reflect the price most big four bank customers actually pay for their home loans.

Indeed, the ACCC found there’s little difference in the headline variable rates of the big four banks, which on face value quickly deters borrowers from switching it up and refinancing to a lower rate.

But in reality, close to 90% of big four banks home loan customers receive discounts off the headline variable rate. And many of those receive non-transparent discretionary discounts.

So how big are the discounts?

We’re talking pretty big differences here, especially compared to advertised rates.

For example, a borrower with an average-sized principal and interest mortgage of $386,000 could save about $5000 on interest payments in the first year if they went from having no discount to receiving the big four banks’ average discount of 128 basis points.

The report also found the big four bank customers whose principal and interest loans were greater than five years old were paying an average 40 basis points more than those with similar new loans.

That means for a loan of around $200,000 (the average size of a loan more than five years old), a borrower who refinances could save around $850 in interest in the first year.

So what’s the next step?

That’s easy: you owe the bank nothing – in terms of loyalty – so it’s time to see what your options are.

And we can help because we know what rates lenders are really offering – despite what their “headline” rates say.

So if you’re keen to find ways to save interest on your home loan, please get in touch. We’re happy to walk you through your refinancing options any time.

If your financial goals took a hit during the coronavirus crisis, you might be struggling to stay motivated.

Or maybe lockdown gave you a new perspective on life and you now have new goals to work towards.

Whatever you’re saving up for, if willpower just isn’t cutting it, these apps could help you reach your goals.

Nudge
COST: FREE
OS: IOS and Android

Nudge is the vision board of the 21^st century.

The new app pairs clever technology with behavioural economics to encourage Aussies to save more money, more often.

Founder Andrew Wilson says the app is designed to challenge our natural tendency towards impulsiveness into a positive savings habit.

So how does it work?

First, you tell the app what you’re saving up for – be it a Panigale or a trip to Paris – and how much it costs.

After uploading a photo of your goal, the app will send you occasional prompts to save an amount towards it.

Once you accept the prompt, money is transferred from your Australian bank account to your Nudge account.

According to the team behind Nudge, “The user can control the prompts in terms of frequency and average value, but the messages automatically customise based on their behaviour – follow through on the prompts and they’ll receive encouragement; repeatedly ignore or decline them and they’ll receive gentle prods to lift their game.”

Remember the vision board?

The photo of your goal will be hidden by a grid of tiles, one of which is removed with each payment, as you get a step closer to your destination.

Streak
COST: $8
OS: iOS 9.0 or later, Android 4.1 and up

Want to develop new habits in 2021 but worried about sticking it out? Streaks is the app for you.

It allows you to set up to 12 habits that you want to make or break, from flossing daily to giving up takeaway coffee, and extends your streak each day you complete a task.

The Apple Design Award-winning app can be customised to suit your tastes, allowing you to select from 78 colour themes, more than 600 task icons and how often a task should be completed.
You can update the app from your iPhone, Apple Watch, iPad or Mac, and view your task statistics to stay motivated.

At $8, Streak is on the pricey side for an app, but it could be worth it, especially if you’re saving $4 a day on coffee.

Google Keep App
COST: Free
OS: IOS and Android

Google has come a long way since it started as a search engine in 1997. There are Gmail, Google Maps, Google Drive and more recently Google Meet.

You might also want to consider Google Keep, available as a standalone app but probably already installed on your phone or desktop as part Google Workspace (formerly G-suite).

It is a notepad app perfect for anyone working in a creative industry who likes the convenience of collaborating on the go using Google Workspace apps, including Google Classroom and YouTube. Everything from brainstorming ideas to uploading content online to archiving can all happen under one roof.

Keep allows you to log your scribbled notes, videos, audio files and photos under the one note file. It offers shortcuts like tagging and coloured labels to organise your ideas. Your notes are instantly saved directly to your Google Drive.

Top marks for its Google integration and ease of use.

Expensify
Cost: Free (in-app purchases)
OS: iOS 11.0 or later; Android 5.0 and up

Expensify lets you track your receipts for tax and personal expenses; submit your expenses to the office or accountant; collect receipts from your team or clients; or control your company’s spending.

Use its SmartScan technology to capture a photo of your receipt and record it as a work expense or a transaction tool for your everyday spending.

Initially you get 25 free scans every month, and you can upgrade to unlimited scans for $6.99 per month. If you run your own business, expect charges to be $7-$13 per month (per individual) depending on your package.

If you get the Expensify Card you won’t have to see a physical receipt again. Swipe it at the point of sale and you’ll automatically get an e-receipt.

You could even have the expense sent straight to your company or accounting software. The card also works with your smartphone’s contactless wallet.

YNAB
Cost: Free (in-app purchases)
OS: iOS 12.0 or later; Android 6.0 and up

If you would prefer not to share or link your personal banking details with a budgeting app, but still want to track your daily spending, then YNAB is a solid choice.

The US-based app only links personal banking details with US finance institutions, meaning you’ll have to enter your budgeting information manually if you’re using the app with Australian banks in mind.

One of the interesting features is real-time access to the app across multiple devices, so you can budget alongside family and friends easily.

Another YNAB feature is that it continually comes back to the business’s “proven method”, which is four budgeting rules: give every dollar a job, embrace your true expenses, roll with the punches and age your money.

The app is free for the first 34 days before in-app purchases begin. It also offers a 100% money-back guarantee if you’re not satisfied with the product.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Here’s what it means for you

he government will relax its strict credit laws and regulations in March to help lessen the impact of COVID-19 on Australia’s financial climate.

Announced in September, the changes will reform the responsible lending laws, introduced by the Labour Government in 2009.

So what are these new lending laws and how do they affect everyday Aussies?

What are the new lending laws?

The new lending laws which will be introduced in March 2021, are expected to reduce the cost and time it takes consumers and businesses to access credit, making it easier for Aussies to take out a new mortgage or to refinance their existing home loan.

These new changes will also balance the banks’ and borrowers’ burden on only borrowing what they can comfortably afford to repay.

The key changes from the old responsible lending laws include:

 

• Removing responsible lending obligations from the National Consumer Credit Protection Act 2009, with the exception of small amount credit contracts and consumer leases.
• Ensuring that authorised deposit-taking institutions (ADIs) will continue to comply with Australian Prudential Regulation Authority’s (APRA) lending standards requiring credit assessment and approval criteria.
• Protecting consumers from the predatory practices of debt management firms by requiring them to hold an Australian Credit License (ACL) when they are paid to represent consumers in disputes.
• Allowing lenders to rely on the information provided by borrowers, replacing the current practice of ‘lender beware’ with a ‘borrower responsibility’ principle.
• Removing the ambiguity regarding the application of consumer lending laws to small business lending.

 

Why did we have responsible lending laws?

Responsible lending laws initially came into force in Australia in 2009 by the Labor Government after the global financial crisis (GFC).

In line with the National Consumer Credit Protection Act 2009, these laws were also created to provide guidelines for lenders when looking into loan applications, ensuring they only grant loans to suitable, risk-appropriate borrowers.

These rules also placed the burden of responsibility on the lender to ensure the credit product is suitable, by verifying the applicant’s requirements, objectives, and financial situation.

The government has now decided to amend these regulations and relax the responsibility placed on lenders, particularly around the accuracy of information the consumer provides on their application. By reducing this verification burden, Frydenburg’s goal is to cut the red tape so credit flows smoothly, boosting the struggling Australian economy.

What do Aussies need to know about the new lending laws?

The easing of the responsible lending laws is expected to dramatically impact the financial situation of many Aussies, especially those focused on buying a home, undergoing a renovation, or purchasing an investment property.

Aussies will also find it easier to switch between credit providers if they’re on the hunt for better deals.

However, the relaxing of these laws does not mean credit will become a free-for-all.

Many consumer advocacy groups argue that the reforms would only burden individuals with debt they cannot afford, which will hurt consumer spending, and ultimately slow down the economic recovery of the country.

These groups also believe Aussies were safer in the hands of banks and non-bank lenders, as they had the experience, expertise, and data to run meticulous assessments to determine whether a borrower was able to afford a loan. Now, without their immediate intervention, borrowers are instead basing their ability to afford a loan on their own assumptions.

It’s important that borrowers act prudently and cautiously when entering new home loan agreements.

Borrowers will need to become more responsible for their declared living expenses and should ensure they are able to afford the repayments on a new loan.

They need to understand their expenses, how they spend their money, and what expenses they are willing to forgo to ensure they can afford their loan repayments, now and in the future.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.