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Members of the broking industry have welcomed the final report from the Senate’s home ownership inquiry.
The broking industry has welcomed the recommendations from the Senate economics reference committee’s final report from the inquiry into Australia’s financial framework and home ownership.
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After hearing evidence and receiving submissions from the broking industry (including the MFAA, FBAA, and individual brokers), the Australian Prudential Regulation Authority (APRA), lenders, and other stakeholders, the committee released its final report last Thursday (28 November).
The committee, chaired by senator Andrew Bragg, issued seven recommendations including preparing prudential guidelines for a lower serviceability buffer for first home buyers “that can be adjusted responsively to the economic cycle and to support financial stability settings within APRA’s prudential standards”.
The inquiry also suggested that the government issue a new Statement of Expectations for APRA, which would include a requirement to consider the long-term benefits of widespread home ownership – for financial, social, and fiscal stability – when setting prudential standards.
‘Vindicating something we’ve said that needs to happen’: FBAA
Speaking to The Adviser, the managing director of the Finance Brokers Association of Australasia (FBAA), Peter White AM, said a lower serviceability buffer was something the body had been championing for years.
“From our point of view, this is vindicating something we’ve said that needs to happen. We’re fully supportive of that,” White said.
“In our last paper, we [had] the position that buffer range should be dropped to about 2–2.5 per cent. And for first home owners, maybe there’s a consideration to be lower than that, maybe 1.5–2 per cent, to give them a better entry point into the marketplace.”
White said that he believed the serviceability buffer should be regularly reviewed by APRA.
“There is no formal due process given to review the buffer rate. It only ever happens when there’s a crisis or something goes wrong, or somebody jumping up and down screaming,” White said.
“It needs to be process driven to ensure that, on a regular basis, it’s fit for purpose. In the current market, as far as I’m concerned, it’s not. [It] hasn’t been, probably for the last year. APRA does not have a process where they look at this, say once a year, and check to make sure it is fit for purpose, for the environment that we’re in.”
Allowances for a lower buffer ‘makes sense’: MFAA
The Mortgage & Finance Association of Australia (MFAA) also welcomed the report’s findings, with CEO Anja Pannek saying the body was pleased to see many of its recommendations incorporated.
The MFAA had called for a dynamic buffer adjusting with interest rates in its submission, for example.
“Allowances for a lower serviceability buffer for first home buyers at appropriate stages through the economic cycle to us makes sense,” Pannek said.
Pannek also acknowledged APRA’s recent announcement that the 3 per cent serviceability buffer would remain in place, saying it underscores the importance of industry dialogue.
“While the buffer is critical in managing systemic risk, our members have told us that along with other factors, the buffer can be a barrier for those trying to get a foot in the door, especially in the context of rising interest rates,” Pannek said.
Time to turn ideas into action: Loan Market
Loan Market CEO David McQueen also welcomed the final report, saying current regulations are “making it harder for first-home buyers but also increasing the cost of credit for all borrowers”.
“This creates a system where credit is available but not always accessible in an equitable way,” McQueen said.
“There’s a smarter way forward. Rather than removing or reducing buffers outright, I advocated for more dynamic and flexible policies that adapt to the economic environment. This would balance stability with greater access to affordable credit.”
While labelling the recommendations as “sensible”, McQueen said that “turning those ideas into action is critical”.
“The challenges facing homebuyers aren’t just about getting on the ladder – they’re about making it affordable to climb. With smarter regulations and adaptive policies, brokers are ready to help more Australians achieve their homeownership dreams,” McQueen said.
What’s next?
A spokesperson for the Australian Banking Association trod a similar line in its response to the inquiry’s final report, but conceded “there is no silver bullet to addressing the current housing affordability crisis”.
“The ABA believes that increasing supply will make the most meaningful difference to get more first home buyers into the market,” the spokesperson said.
“The ABA looks forward to continuing to engage with the Parliament to make sure that the regulatory settings strike the right balance between access to credit and responsible lending.”
[Related: Senate inquiry recommends reducing 3% serviceability buffer]
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