Publication Date: Friday, 20 November 2020
This article originally appeared in Mortgage Professional Australia
Non-bank lenders and recently licenced ADIs are urging the Reserve Bank of Australia to launch a review of the allocation criteria for its $200 billion Term Funding Facility, according to a report by Banking Day. Non-banks argue that the TFF has tilted residential mortgage flows in favour of major banks.
Under the TFF’s rules, all APRA-licenced deposit-takers can draw down up to 5% of their loan books, Banking Day reported. That means most of the funding goes to Australia’s largest banks: ANZ, Westpac, NAB and CBA.
“There is an uneven playing field between banks and non-banks in relation to the pricing of financial support provided through the TFF,” Adam Moore, director and head of securitisation at Brighten Home Loans, told MPA. “The non-bank market makes up an increasingly significant percentage of the residential mortgage market in Australia, and to continue to encourage competition, we believe TFF support should be extended to non-banks. The current disproportionate measures risk pricing non-bank lenders out of certain product segments, which in the long run will be a low for the end borrower in terms of choice and flexibility.”
Non-bank lenders are seeking meetings with federal government ministers and Treasury officials to push for a reworking of the TFF allocation rules, Banking Day reported. Non-banks say the major banks are “weaponizing” the TFF against their businesses.
During an online conference held Tuesday by the Australian Securitisation Forum, RBA assistant governor Chris Kent defended the TFF, Banking Day reported. Kent said the amount of funding under the TFF was “modest” and only had an impact “at the margin.”
“There has always been a gap in the funding costs for ADIs and non-ADIs,” Kent said. “I don’t think the gap has opened up as a result of our actions.”
James Austin, chief financial officer of Firstmac, disagreed.
“We are confident the RBA, on reflection, would concur with our observations,” Austin told Banking Day. “The banks have used TFF funding to offer large cash-backs to consumers switching home loans, but are only offering this on fixed-rate loans where the borrower is locked in for the equivalent period of the subsidised TFF funding. These offers are not applicable to variable-rate loans and banks have not passed on any of the savings in terms if cheaper variable-rate loans.”
Austin also told Banking Day that the impact of the TFF was far from “marginal.” He said that Firstmac expected to lose one-third of its home-loan book to the major banks if the allocation criteria were not changed.
Moore agreed that the criteria needed to be changed.
“We would like the counterparty eligibility criteria to be extended to allow TFF support to be extended on a proportional basis to non-banks,” he told MPA.
Couldn’t be happier with the service we received From Kay. Easy to communicate with, always helpful patient and friendly. As a builder, progress payment process sometimes become very complicated, Kay helps us to follow up every requests that we highly recommended!
Their ability to work with clients with such high customer service level and fast processing speed is incredible.
I have been working with my BDM, Mikai Ning, for two years. Since meeting her, she has continued to impress me with her professionalism, her efficiency, and her patience to listen and explaining all information. Even during pregnancy period, she even said to me personally that if there is anything I require, that Mikai is still contactable and will get back to me as soon as she can. Her attitude is always super nice and is highly passionate about what she does. I have been in this field for so many years and she is the best BDM I have worked with.
Great review for Mikai Ning. Not only is she highly passionate, but she is also very hard working and highly detail oriented in her work. No matter what time of the day, or day of week, she will always get back to us. We highly appreciate Mikai and Brighten for their hard work and ongoing support.
Brighten’s BDM, Liwen, has left a very impressive impression. Whether it is policy or product, she can solve and fix any problem, big or small, she is always reaching out and supporting us. From the beginning, It has been great to work with Brighten’s vastly experience team and great products. I always recommend Brighten to all my clients.
Mikai is a very passionate and proactive person. Our work with Mikai has is nothing but positive outcomes and we look forward to continuing working Brighten and Mikai.
My BDM Leo Liu has been a great help in assisting me setting up the referral program and educating in terms of products and knowledge. I look forward to the greater relationship with Brighten Home Loan and Leo Liu.
It is just an incredible experience to work with Kay Yang. As it was my first time to write a deal through Brighten. Kay Yang was really supportive all the way through. Communication at all times, and being kept in the loop, were flawless and you could not wish for anyone better to look after your client’s interests.
Mikai is our BDM and she is a very detail oriented with great work ethic and speed. If there is a policy update, she will always try and get in touch with us as soon as possible to ensure that we received and understand the relevant changes so that we can better accommodate our clients. Thank you for your ongoing support to us brokers.
I wish to thank BDM kay yang of her excellent service to broker. She had been very patient with my scenario questions. Always prompt to reply and it was pleasant to work with her.
It has been very convenient with the interest rates being lower also. Brighten home loan was able to solve so many problems for overseas clients. Big thanks to BDM Mikai for all her support.
I need to thank my BDM Liwen Liu. She has been very responsible since the beginning. She is always patient with my home loan scenario enquires. She always tries to do best for the clients. Liwen is very professional, always gives good advice to brokers. She is an excellent BDM. Thank you.