MGI Perth

This month has seen the RBA take a breather on raising interest rates, with the cash rate remaining at 4.5%.

The RBA noted risks to the economy associated with events in Europe in making this decision, alone with evidence that the housing market is showing signs of cooling in certain markets. Most commentators still believe a move to a 5% cash rate by the end of 2010 is possible.

There are some significant developments in the finance industry at present. Currently, Western Australia is the only state that requires finance brokers to hold a licence. From the 1st of July 2010, a new national licencing scheme will be in place, administered by ASIC, requiring all financia industry participants to hold a national finance licence. This should help to improve the standards of finance brokers Australia-wide.

I have included an article from The Australian below which shoes how crucial it is to select the right finance broker to look after your interests.

Regards,

David James

E: finance@mgiperth.com.au | T: 08 9463 2466

MGI Perth is a fully accredited member of the MFAA.

Finding a trusted source to choose a loan is crucial to ending up with a product that suits the needs of anxious property investors.

The landscape for mortgage brokers has been transformed by the credit crisis and reinforced the stranglehold the major banks have on the market, bringing the need for fiduciary duty into stronger focus. The sector also has to face new oversight and licensing in the form of legislation, which gives ASIC the power to regulate credit advisors.

When choosing a broker, borrowers should check if the person is a member of a professional industry association. The Mortgage & Finance Association of Australia has 12,500 members which represents about 75 percent of domestic brokers. The association holds members to an educational and ethical standard, such as acting in the client's best interests. The MFAA recommends that brokers be asked about their education and experience, the fees to be charged, and what commissions they will be paid.

Licensing by the Australian Securities and Investment Commission will start gradually from July, while borrowers can get assurances that brokers have sufficient experience in the market.

Check if fees are being charged and the commissions being paid, which may bring into question whether the broker is independent.