LMI being abolished?

Discussion in 'Loans & Mortgage Brokers' started by Paterson00, 7th Jan, 2020.

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  1. Paterson00

    Paterson00 Well-Known Member

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    Hi all

    Haven't posted for ages but needed to jump back on to ask this one.

    I heard today from a guy at work that there is talk of LMI being abolished. I was in disbelief at the time but hoped he was right although I suspect I know the answer.

    This would be all over the news wouldn't it?

    I'd mentioned about the recent announcement about the first 10,000 applicants gaining whatever benefit was recently announced but he was adamant he'd heard it correctly.

    Can we clarify? If anyone's going to know it's going to be this group.

    Hoe you're all well by the by...

    Paul
     
  2. sumterrence

    sumterrence Well-Known Member

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    Nope, never heard of lmi being abolish for everyone. And don't think it fits the risk management side too if no lmi are required.
     
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  3. Archaon

    Archaon Well-Known Member

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    First home owners under ScoMo plan would be able to borrow 95% with government funded and backed LMI, if this is perhaps what your friend was referring too, no abolishment that I've heard of.
     
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  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney

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    no
     
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  5. Brady

    Brady Well-Known Member

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  6. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The scheme is limited to 10,000 which will reflect a small percentage of first home buyers. APRA wouldnt allow LMI to be removed without a serious impact on bank abilities to lend. LMI avoids a major capital reserve held by banks as it transfers the risk from the bank balance sheet to the insurer.
     
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  7. Jamesaurus

    Jamesaurus Well-Known Member

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    Yeah this is likely what old mate from work is on about.

    Given the limit on prices though, in Sydney this is pretty much exclusively for Western Sydney. This makes sense politically with more marginal seats out there. Not many properties in Scomo's safe seat of in Cook in that price bracket.
     
  8. Scott No Mates

    Scott No Mates Well-Known Member

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    Seriously, do you really want fhb in Cook? Possibly in the low end of Kurnell or Kirrawee/Woolloware.
     
  9. Brady

    Brady Well-Known Member

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    Actually pretty pointless scheme.... it was only for 10,000
    5,000 went to CBA & NAB, 5,000 to minors.
    CBA and NAB have pretty much filled those spots within 8 days.
    Likely to buyers who were are already approved, but now buying for slightly higher or keeping the LMI savings.
    In turn not really helping NEW buyers that weren't previously able to buy.
    But obviously those eligible and fast enough to secure a spot are getting ok benefit.
    Works very well in those states that have stamp duty concessions for FHB, only a small savings for states without it.
     
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  10. Lindsay_W

    Lindsay_W Well-Known Member

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    Nab have now reduced their LMI for all first Home Buyers by 33% - it's not amazing but it certainly will help some fhb's
     
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  11. Brady

    Brady Well-Known Member

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    Interesting, any further details about this? Good action from them, they have spent $$$ on promoting the FHB scheme which is already seen the allocation exhausted, looks like they're leveraging off of this.
     
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  12. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    NAB were blocked from the scheme due to their breaches on lending. They didnt meet the responsible lender test. Says a lot about a banking system when the Govt doesnt trust them.

    They dropped their LMI charges (wonder how ??) to regain some ground. Suggests the ACCC / APRA should look at how this occurred. Have NAB been price fixing with their preferred LMI provider ??
     
  13. Brady

    Brady Well-Known Member

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    I believe it was Westpac that was blocked, my understanding was CBA intially wasn't in and picked up with WBC given the boot.

    I haven't seen any documents on this yet, just comment from @Lindsay_W
    NAB definitely still advertising they're on the First Home Buyer Scheme, heard it on the radio yesterday
    Which I thought was funny as no allocations left
    Which makes me think they're leveraging off of those interested, with lower LMI would make deposit required lower.
     
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  14. Lindsay_W

    Lindsay_W Well-Known Member

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    33% LMI Discount for all eligible First Home Buyers from 1 January 2020 (says for a limited time but no actual end date given)
    NAB email was sent to the broker network last week 03/01/2020

    Eligibility:
    • All borrowers must be first home buyers and identified as a First Home Buyer in the customer’s Home Loan Application (First Home Buyer criteria should be applied as per current process).
    • All applications will have the LMI discount automatically applied if unconditional approval occurs on or after 1 January 2020.
     
  15. Lindsay_W

    Lindsay_W Well-Known Member

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    No they weren't, you must be thinking of Westpac

    Most likely the cost is subsidised by NAB (ie. NAB covers the cost on behalf of the borrower) How would this warrant ACCC/APRA involvement?
     
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  16. Jamesaurus

    Jamesaurus Well-Known Member

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    I know a few personally that live in units in Cronulla itself, then tending to be houses closer to Sutherland