Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter
subscribe to our newsletter

FBAA hits out at cheaper mortgage claims

The Finance Brokers Association of Australia (FBAA) is alarmed by reports the European Central Bank's rate cuts will mean cheaper mortgages for Australian borrowers.

FBAA chief executive Peter White said that while everyone would like cheaper rates, it will also encourage people to overcommit without taking future rate rises into consideration.

“Our response to these media reports is 'caveat emptor' – buyer beware – as rates that are too low can only go in one direction,” Mr White said, adding that abnormally low rates may encourage more loans but, “the upwards correction could be quite large to compensate the extreme low”.

Advertisement
Advertisement

“This will not only remove any advantage borrowers had but could have the reverse effect and result in people losing their homes due to a failure to meet increased payments,” he said.

Just as the FBAA has often called for banks to absorb increases to protect borrowers, they should equally absorb any unusually low cost of funds, Mr White said.

“Borrowers thrive when interest rates are more constant,” he said.

“Any drop on the cost of funds simply won't last. It can't.”

FBAA hits out at cheaper mortgage claims
mortgagebusiness

Latest News

The banking industry has agreed on a common approach to COVID-19 loan repayment deferrals, stating that these will not impact a borrower...

The ratings agency is forecasting a material rise in defaults off the back of the economic shock from the coronavirus outbreak. ...

With lower interest rates off the table, the Reserve Bank has been urged to ramp up its quantitative easing strategy. ...

FROM THE WEB
podcast

LATEST PODCAST: Managing the influx of COVID-19-related loans

Do you expect COVID-19 to reduce or increase your business flows?

Why we’ll keep delivering for our communities in the face of COVID-19

alex

As Australia tries to keep pace with a rapidly changing business and social landscape in the wake of COVID-19, Momentum Media is leading the way delivering essential content to our communities, writes Alex Whitlock, director of Mortgage Business.

Read more

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.