How to find a bank with strong corporate social responsibility

Yes, we’re well aware that this may sound like an oxymoron to some! But cheeky jokes aside, this is a question we’ve been increasingly receiving. So today we thought we’d look into what good corporate social responsibility means, and how you can find it in a bank.

What do you look for when pairing with a bank?

An attractive rate? Convenience? Low fees? High transparency?

What about good corporate social responsibility?

In the wake of the Banking Royal Commission, it’s a question we’re seeing pop up more and more.

In fact, even before the royal commission a report found that 4 in 5 Australians would consider moving their investments to another provider if their current provider engaged in activities not consistent with their values.

So, as property is likely one of your biggest investments, today we thought we’d take a look at what exactly corporate social responsibility means and how you can find out if your bank embraces it.

What is corporate social responsibility?

Corporate Social Responsibility (CSR) is generally understood to mean that corporations have a degree of responsibility not only for the economic consequences of their activities, but also for the social and environmental implications, according to the Australian Human Right’s Commission.

Some lenders sponsor rescue helicopters, many provide community grants, while others throw their support behind social causes.

If you’d like to know what type of CSR work your bank does, simply google your bank’s name + CSR. The more recent the result the better, especially in the wake of the banking royal commission.

That said, as Dr Stephanie Schleimer from the Griffith Business School points out to the ABC, “CSR reports are not meant to be glossy brochures that look like advertising.”

In other words: it’s one thing for banks to make a snazzy list of their CSR activities, it’s entirely another for them to make a meaningful impact.

So how do I find a bank with strong CSR principles?

Well, you see, if you google “banks ranked corporate social responsibility” you’ll find…

Huh, not much. Basically banks tooting their own horn in their own reports.

Not to worry.

Maybe, if you try googling “best bank CSR” you’ll find… Nevermind…

You see, this is where it gets a bit tricky.

What you consider ethical, or to be a bank displaying strong CSR principles, will be completely different from the next person.

It’s a bit of a case of horses for courses, if you will.

Hmmm. So are there any other ways to identify strong CSR lenders?

Absolutely! Come and have a chat with us.

Everyone’s ethical compass points a slightly different way, so we can give you a pretty good idea of lenders on our panel that are making efforts in the areas of CSR that you may identify with.

It’s definitely a topic we’re seeing come up more frequently, so rest assured we’re watching this space closely.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.

Is the housing market finally about to reach rock bottom?

‘Are we there yet?’ That seems to be the million dollar question on everyone’s lips. Today we’ll take a look at whether or not the property market is finally starting to stabilise, as well as when we might start seeing some positive changes in the market.

Shhh. Can you hear it?

It’s the sound of optimism breathing its way through the Australian property landscape once more.

Let’s run through what some of the property market’s leading experts and reports have said recently.

CoreLogic

CoreLogic says the housing downturn is losing steam as the pace of declining values continued to reduce in May.

With Australia’s average housing affordability the best it has been since 2016, CoreLogic’s Head of Research for Australia, Cameron Kusher predicts “that price falls will settle later this year, followed by modest price growth starting from 2020”.

Westpac

Consumers think now’s a pretty good time to buy a house, according to the Westpac sentiment survey’s ‘time to buy a dwelling’ index.

“Housing-related sentiment showed a clear response to the lowering in interest rates, although again some of the gains were more muted than seen in past rate cuts,” Westpac senior economist Matthew Hassan said.

AMP Capital

Since peaking in October 2017, house prices in capital cities have fallen about 10%. Forecasts had suggested they’d fall as far as 15%, but AMP Capital believes they’ll now only bottom out at 12% later this year.

“The combination of the removal of the threat to property tax concessions, earlier interest rate cuts, financial help for first home buyers and APRA relaxing its 7% interest rate test points to house prices bottoming earlier and higher than we have been expecting,” said Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist, AMP Capital.

ANZ

ANZ’s Home Owners Lead, Kate Gibson, says they’re seeing suburbs and towns in every state where it is more affordable to buy than rent. Here’s the list if you’re interested.

“This shift, combined with record low interest rates, is driving more first home buyers to look at entering the market,” Ms Gibson said.

The Australian Bureau of Statistics (ABS)

According to the latest ABS data, the value of lending commitments to households rose 0.6% in April 2019.

“The steep decline in owner-occupier lending commitments seen since late 2017 appears to be slowing,” said ABS Chief Economist, Bruce Hockman.

Want to know more?

Sure, the nationwide property market might still be trending down. But optimism seems to be on the way up.

If you’d like to know how this shifting landscape might affect your lending situation, then please get in touch – we’d love to run through it with you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.

Getting hounded by ATO impersonators? Don’t get scammed this tax season

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Tax time is just around the corner, which means ATO impersonators are pulling out their bag of tricks to try and scam you. Here are the main scams currently doing the rounds.

It’s fair to say that no one likes getting on the wrong side of the ATO. And this is one of the main reasons why ATO tax scams are so effective.

The other main reason is that these scams are becoming increasingly sophisticated and tech-savvy.

Not only do they look more convincing, but they’re also reaching more people through a wider number of distribution channels, such as SMS, robo-calls, and emails.

Below we’ve outlined some of the latest scams to ensure your monthly budget, mortgage repayments or savings account doesn’t get thrown into disarray.

Fake tax agent (phone scam)

The scam: a scammer pretending to be from the ATO sets up a three-way phone call between themselves, the victim and another scammer, who pretends to be an accountant who works at the same practice as the victim’s tax agent (the fake tax agent advises that the victim’s actual tax agent is currently unavailable).

The two scammers then work together to convince the victim that they owe thousands of dollars to the ATO, and that they need to immediately pay off the debt to avoid going to jail.

They’ll then ask the victim to pay using unusual methods of payment such as iTunes, Bitcoin cryptocurrency, store gift cards or pre-paid visa cards.

Avoid being scammed: know the status of your tax affairs by checking your details via myGov. Or hang up and independently call your tax agent or the ATO on 1800 008 540.

Extra tip: a variation of this scam is when the scammer offers a tax refund but advises that you have to provide a personal credit card number for the funds to be deposited into. Instead of the scammer depositing money they’ll instead steal funds from these cards.

Tax refund notification (SMS scam)

The scam: scammers are texting people informing them that they are due to receive a tax refund.

However, if you click on the link it will take you to a fake ‘Tax Refund’ form, where it will ask you to fill out your personal information (which the scammers will then steal!).

Avoid being scammed: the ATO doesn’t have an online ‘Tax Refund’ form and will never send you an email or SMS that asks you to access online services via a hyperlink.

Extra tip: all online management of your tax affairs should be carried out via your genuine myGov account, which you should only ever access by typing out my.gov.au into your URL address bar.

Imitating ATO phone numbers (phone scam)

The scam: the ATO is reporting an increased number of scammers contacting people using phone numbers that make it look like they’re genuinely from the ATO.

The numbers that have been appearing most frequently are 6216 1111 and 1800 467 033, but numbers for individual ATO staff members have been used as well.

The scammer will usually claim the potential victim has an outstanding tax debt and threaten them with arrest if it’s not paid immediately. Sometimes voicemail messages are left.

Avoid being scammed: remember that the ATO will never threaten you with arrest, demand immediate payment, refuse to allow you to speak with a trusted advisor or tax agent, or present a phone number on caller ID.

Extra tip: never call a scammer back on the number they provide. If you are in any doubt about an ATO call, hang up and phone the ATO directly (on 1800 008 540) to check if the call was legitimate.

myGov tax refund notification (email scam)

The scam: scammers are emailing people from a fake myGov email address, asking them to fill out an application to receive a tax refund – similar to the SMS scam above.

This scam is currently tricking victims because it displays the ATO’s myGov logo and the links look as though they’ll send you to the myGov website (spoiler: they don’t).

Avoid being scammed: do not click anywhere in these emails as they contain malicious links. As mentioned in the SMS scam, the ATO doesn’t have an online ‘Tax Refund’ form.

Extra tip: if the bottom of the suspected scammer’s email contains a line that says ‘If you feel you received this email by mistake or wish to unsubscribe, click here’, don’t click. It’s most likely another nefarious link.

Final word

If you ever suspect that you’re being scammed, don’t feel obliged to stay on the phone to be polite.

Simply hang up the phone straight away (or close the email) and either check your myGov account or directly contact your accountant or financial adviser.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.

Will lenders pass on the RBA rate cut to you?

The RBA has cut the official cash rate to a new record low of 1.25%. But hang on a sec… Will lenders even pass on the cut in full? Today we’ll look at how you can make the RBA rate cut work for you.

The Reserve Bank has cut interest rates to 1.25% – down from 1.5% – which is the first rate cut in almost three years (since August 2016).

“The Board took this decision to support employment growth and provide greater confidence that inflation will be consistent with the medium-term target,” said RBA Governor Philip Lowe in a statement.

But will the banks pass the cuts on?

Well, that’s to be determined by the banks. However, the government has urged them to pass on the cuts in full to customers.

Treasurer Josh Frydenberg met with Commonwealth Bank chief executive Matt Comyn the day before the cut was announced after similar meetings with other major bank CEOs.

“I expect all banks to pass on the benefits of sustained reductions in funding costs,” said Mr Frydenberg.

What next?

Well, on the back of the RBA decision, you may see a number of lenders advertising interest rate cuts.

What can be hard to determine is if they’re offering to pass on the full cut, a partial cut, or simply re-advertising a rate they’ve been offering for months.

So what to do?

Well, the good news is that we’re following the market closely. We’ll know which lenders are passing the rate cut on to their customers in full, and which lenders aren’t.

So if you see or hear about a rate cut from a lender that you want to know more about, your best bet is to get in touch with us and we can give you a good idea of how it compares to other lenders in the market and/or whether there are other options that are more suited to your situation.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.

APRA suggests banks relax key lending criteria

Here’s a bit of good news: you may be able to borrow more for your next home loan after the prudential regulator sent a letter to the banks asking them to relax a key lending criteria.

In a letter to lenders, the Australian Prudential Regulation Authority (APRA) has proposed removing its guidance that lenders should assess whether borrowers can afford their repayment obligations using a minimum interest rate of at least 7% (although most ADIs currently use 7.25%).

Instead, APRA has proposed that authorised deposit-taking institutions (ADIs) use an interest rate buffer of 2.5% over the loan’s actual interest rate when assessing a customer’s ability to manage repayments.

How you’ll be assessed

CoreLogic research analyst Cameron Kusher has done a pretty good job of breaking down how you’ll be assessed under these proposed changes:

“If someone is looking to borrow at an interest rate 3.9%, the borrower would previously have been assessed on their ability to repay the mortgage at an interest rate of 7.25%,” he said.

“Now they would be assessed on their ability to repay at a lower 6.4% (3.9% + 2.5% buffer).”

Kusher added that the proposed APRA changes seem sensible given the interest rate environment with the expectation that rates will fall from here and remain lower for longer.

“Furthermore, since 2014 it has become much more difficult to get a mortgage, that is partly because of this serviceability assessment,” he said.

Why the change?

APRA chair Wayne Byres said the operating environment for ADIs had evolved since 2014, prompting APRA to review the ongoing appropriateness of the current guidance.

“APRA introduced this guidance as part of a suite of measures designed to reinforce sound residential lending standards at a time of heightened risk,” said Mr Byres.

“Although many of those risk factors remain – high house prices, low interest rates, high household debt, and subdued income growth – two more recent developments have led us to review the appropriateness of the interest rate floor.”

Mr Byres said with interest rates at record lows, and likely to remain at historically low levels for some time, the gap between the 7% floor and actual rates paid had become quite wide in some cases, and “possibly unnecessarily so”.

What does this mean for borrowers?

Mr Byres said the changes are likely to increase the maximum borrowing capacity for a given borrower.

However, he warned banks that the changes are not intended to signify any lessening in the importance that APRA places on the maintenance of sound lending standards.

“The proposed changes will provide ADIs with greater flexibility to set their own serviceability floors, while still maintaining a measure of prudence through the application of an appropriate buffer to reflect the inherent uncertainty in credit assessments,” Mr Byres said.

What next?

A four-week consultation will close on 18 June, ahead of APRA releasing a final version of the updated guidance.

CoreLogic’s Kusher said the changes will allow some borrowers who can’t quite access a mortgage currently to get one.

“Overall for the housing market, it will mean more people are able to get a mortgage. These proposed changes in conjunction with the uncertainty of the election now behind will potentially provide additional positives for the housing market,” Kusher said.

In the meantime, if you’d like to find out if these changes might help increase your borrowing capacity, then get in touch. We’d be more than happy to run through your situation with you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.