To mark Global Money Week - a financial awareness campaign built to inspire young people to learn about money matters in partnership with the OECD - SBS News has been looking at how everyone can be better educated about money.The banking royal commission thrust the banks and mortgage brokers into the spotlight, recommending a fee-for-service model, meaning the borrower, not the bank, should pay brokers like Paul Pappas upfront.
"I don't expect clients to pay for our service, many of them won't, so what you're doing is adding to the cost of borrowing, first home buyers will be the biggest ones to be affected, they're already tight on budget, they're already tight on deposit," Mr Pappas told SBS News. Both sides of parliament have rejected the idea, although there may be changes in trail commissions, a recurring fee paid by the lender to the broker, in future.The ABS says the value of new home loans dropped 2.4 per cent in January.Steve Mickenbecker from rate comparison website Canstar says while mortgage brokers are able to compare products and rates across different lenders, there are downsides.
"They don't have every loan in the market place, and they do only have their approved list, their panel, so there might be better loans out there, that they actually have listed."He says that while banks only sell their own products, there some benefits. "There is an advantage of having all of it in one place, and they have terrific online banking systems and there is a an advantage to having it all there, there is a personal balance sheet seeing what do I owe, what do I own.""They were using an overall measure for expenditure and the royal commission said, not good enough you have to look at people's individual circumstances. The banks have interpreted that as let's be a lot stricter.
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