Banking Royal Commission results

Discussion in 'Property Market Economics' started by Ronald86, 1st Feb, 2019.

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  1. Eric Wu

    Eric Wu Well-Known Member Business Member

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    smaller banks won't even have a chance to compete with the big ones, they don't have many branches, not that visible.
     
  2. Speede

    Speede Well-Known Member

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    Now that this pretend fake show is over...banks will start lending again....govt acts like it can go against big 4. LOL
     
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  3. fedex

    fedex Well-Known Member

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    The banks will actually make more income under this arrangement as customers will be funnel through the banks rather than brokers. They also won't have to pay brokers meanwhile the banks will be charging the same if not higher interest rates due to lack of competition. Sounds like a bad outcome to me.
     
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  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    All the recommendations seem 'good' to me. I won't like losing commission, but the recommendations prob won't be implemented.
     
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  5. Deck

    Deck Well-Known Member

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    yeah, I was not expecting much from this RC but this show has been utterly useless, a shame really, there will not be another deep look at FIRE industry before a long long while.Business as usual
     
  6. Nodrog

    Nodrog Well-Known Member

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    If populist idiot Shorten senses the public mood is that banks got off lightly then prepare for Royal Commission round 2:rolleyes:. Anything to get into power rather than for the good of the country.
     
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  7. Deck

    Deck Well-Known Member

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    The current Term of references has castrated this RC quite a bit, but I frankly doubt anyone will propose an other costly RC before a while after seeing how useless this one ended up being.

    At least it s good for properties
     
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  8. Nodrog

    Nodrog Well-Known Member

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    Perhaps they know ongoing litigation for years to come will be punishment enough for the Banks on top of the recommendations. The main winners out of all this are the legal profession.
     
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  9. dabbler

    dabbler Well-Known Member

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    No different to those piling into the property market at the last minute, some already off teh radar & the worst time to start with all the constant changing, drives borrowers mad, imagine the mental torture many brokers have endured....
     
  10. Matt87

    Matt87 Well-Known Member

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    Wonder when all this will be implemented? I can’t imagine anything happening this year..
     
  11. dabbler

    dabbler Well-Known Member

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    Not so fast skipper....a few more twists and turns first.

    But the govt and banks always have been hand in hand, but most of the public do not pay attention, but when the public cry...the govt is quick to stab or pretend to stab them.
     
  12. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    guys, trying to understand,

    In the current model of upfront and trailing fees to MBs,
    every loan holder irrespective of whether they use MBs or not, collectively chipin via baked in rates, right?
    if so under fee-for-service model this MB fee cost will shift to consumers who really want to use MBs, ie more margin left with banks which they can use to compete without too much margin pressure?

    how is fee-for-service model reducing the competition?
    there will still be non bank lenders albeit big banks can be slightly more competitive in term of rates

    Does any one have a number on what is the total of all upfront and trailing fees paid to all MBs last year?

    also curious does banks see MBs as workload balancer(cheaper then hiring staff)? if so why not shift all loan preparation and verification to them and save cost by reducing internal staff?
     
    Last edited: 4th Feb, 2019
  13. Nodrog

    Nodrog Well-Known Member

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    @Deck you’re in a kind mood today, I was expecting you to bite more than that with my reference to Shorten:).

    Will be interesting to hear Labor’s responce as they have said in advance that all recommendations will be implemented by them if elected.

    Personally I’m not a fan of trailing commissions so agree with any of those going.
     
  14. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I think the argument is that if brokers start charging most borrowers will avoid using them this reducing competition as most borrowers will use the more well known banks.

    Half of all loans, approx., Are broker originated so if you can find out the figures for total loans settled per year you can't work out total commissions paid.
     
  15. Nodrog

    Nodrog Well-Known Member

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    Wonder if there will be short covering against banks by Hedge Funds when ASX opens tomorrow?
     
  16. Barny

    Barny Well-Known Member

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    I decided to what until after the report to buy bank shares. It seems the banks have benefited from what I’ve heard and got off without penalty. Might be early to judge but it seems their share price will go up now and brokers are the guys being punished.
     
  17. dragon

    dragon Well-Known Member

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    So bank won’t pay commissions to brokers. Small banks want more effoyto get more customers. So they will advertise / give low interest loans. So the winner will be end customers. Simple!!
     
  18. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Or more people will just stick with the big 4 who will make more profit.
     
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  19. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    This is the bit that doesn't level the playing field. There's been commentary that suggests that mortgage broker commissions are passed onto the consumer in the form of higher rates.

    Of course borrowers pay for the commissions, I like being paid as much as the next person and banks aren't charities!

    What they're not saying however, is that the people in the branch also represent a cost to the bank. If you decide to use a broker or to visit a branch, someone needs to be paid. That cost is passed onto the consumer.

    A recent study indicated that the cost of a broker is less than half than that of a loan manager in a branch. I recently had someone in a branch tell me I could work for the bank and what the income would be - significantly more than the average broker makes (and working only 8 hours a day has it's appeal as well).

    The proposed fee for service doesn't work on two levels...

    1. It is an additional up front cost when buying a home. First home buyers are already struggling to get a deposit together, now they have to pay several thousand for the mortgage setup?

    2. A mortgage broker broker can't run a business and earn a living on $2,500 per deal (which is more than the current average upfront commission). The bank however can charge this and afford to still pay its staff and all the overheads. This expense won't be passed on via cheaper rates, there is no benefit to the borrower. It only creates an uneven playing field, ultimately driving brokers out of business.

    I've spent the past few hours considering the effects of the recommendations. If it comes to pass, it likely puts me out of business or it forces me to evolve to earn income from other related products. Without brokers, the levels of advice drop significantly. Borrowers will have less education and less choice regarding their home loans. Competition is significantly reduced and the cost of this is passed onto borrowers.

    Hardly a good outcome.
     
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  20. Deck

    Deck Well-Known Member

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    yeah, but for sure quite many in the financial industry (big 4 no doubt) are going to drink heavily tonight (for a monday), and high fiving themselves.