Blog - Pearl Financial
Nov 20

The Concept Of Open Banking

By Editorial Team | Interest Rates , Investing

What Is Open Banking?

Open banking refers to large, traditional banks opening up the data they have on customers in order to allow new products and services to be created, supporting all of that up with strict technical standards.

In essence, it allows customers to share their financial transaction data with authorized third parties, and allow authorized third parties to accept payments from their bank accounts.

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Nov 19

How Do Home Construction Loans Work?

By Editorial Team | Building , Fundamentals , Home Loans , Interest Rates

What Are Home Construction Loans? 

Home Construction Loans allows a new home to be built through the term of construction. It is based on the time needed to build a home, and it usually ranges from 6 months to a year. Once your construction loan is approved, your lender will pay your builder every period, after work is completed. As soon as the home construction ends, your loan repayment begins.

Most first home buyers prefer having their home construction loan be combined with their standard mortgage plan, into something termed as a construction-to-permanent loan. This avoids the need to refinance after construction and go through 2 different closings.

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Nov 18

How Savings Rate Cuts Affect Consumers

By Editorial Team | Interest Rates , News

What is a Savings Rate?

A Savings rate is defined as the value stated as a percentage or ratio, that an individual can deduct from his or her net income for the purpose of saving it for retirement. That particular amount of money is usually put invested in very low-risk investments such as money market funds or for a retirement account.

What Are The Factors That May Affect Savings Rate?

Savings rates tend to reduce as populations age. In this case, they chose to spend their money rather than saving them. Interest rate policies can also affect the decision of the people. Some other factors include:

  • Confidence

Consumer confidence can affect the savings rate. If the households could feel negativity towards the economic opportunities, consequently, they will prefer to save more and focus on paying off their debts.

  • Financial Status

When a credit crisis happens, credit can’t be obtained easily. Therefore, financing will decrease, and people will choose to focus on saving. On the contrary, a greater chance of credit, and an increase in work productivity can cause a lesser chance of saving.

  • Wealth  

 Another factor that can lower savings rates is the increase in wealth. People usually save to buy properties such as their own home. The housing market has a big influence on saving in Australia. Increasing house prices promotes mortgage equity withdrawal, and at the same time, an increase in spending. Conversely, a decrease in house prices has the opposite effect.

  • Net Income Growth

Savings rates can be affected by wage growth. Negative net income growth will result in a decline in the savings rate. As a result, people will spend through financing and from their savings.

  • The Effect Of Savings Rate Cuts

Economic experts believe that a higher interest rate can lead to lower overall expenditures and higher savings.  It is because the substitution effect outweighs the income effect.

Substitution Effect

Lower interest rates substitute saving for spending. It implies that a cut in the interest rate also means a drop in income as these people receive lower income payments. It will attract consumers to hold their cash rather than spending it. For instance, if a pensioner relies on interest payments from saving, he may decide to save more with the intention of maintaining his target income from his savings.

Income Effect

The amount of spending is based on income. Lower interest rates make saving less attractive. However, some consumers may react to lower interest rates by saving more so as to maintain their standard of living. On the contrary, some consumers may spend more if their income increases and they may spend less if their income drops.


Based on the latest news from RateCity, ANZ and NAB have reduced their savings rate again. The cutting of the savings rate intends to make financing at a lower cost for consumers and businesses. It also promotes spending and strengthening the economy.

Nov 15

Westpac Has Revised Owner Occupied Lending Policy

By Editorial Team | Home Loans

This move from the major bank (Westpac) is to allow owner-occupied loans to be secured against an investment property. It is for the situations that may happen wherein the loan is to be secured by a non-owner-occupied residential property. Westpac has already informed their brokers about it and this update will be effective on Tuesday, November 19, 2019.

What Does The Revised Owner Occupied Lending Policy Covers?

The Revised Owner-Occupied Lending Policy will be implemented in the following instances wherein; this update does not intend to generate income as well as not a tax deduction for investment. 

It was also noted on the revised policy that the use of non-owner occupied residential property as a security in purchasing an owner-occupied home is acceptable. It is not only limited to the former but also on the use of the equity in non-owner occupied residential property to fund owner-occupier purposes such as the renovation of an owner-occupied property. The exception of this policy is on non-owner occupied residential property to be used as security for bridging loans, as the bank will now allow it. 

The announcement for this revision came after less than a month when Westpac has announced that it would be increasing the maximum LVR (Loan-To-Value Ratio) for investor loans with an interest-only term rates at 80% – 90% which also includes any capitalized mortgaged insurance premium this follows the decision from the Reserve Bank of Australia to reduce the official cash rate. 

Westpac general manager for homeownership Will Ranken stated that “Providing the support and finance to help buyers purchase their next investment property is a key focus of our lending strategy. “ He then concluded, “We believe this change will provide a competitive proposition for investors looking to purchase their next property.”  

Nov 15

FBAA Calls For A Review In The Credit Policy

By Editorial Team | Home Loans , Interest Rates , News

The effect of lower mortgage rates will fail to stimulate lending within Australia unless banks will ease their credit policies, which were tightened in the midst of investigation from the banking royal commission.

Managing director of the Finance Brokers Association of Australia (FBAA) Peter White, has said Reserve Bank of Australia’s rate cuts isn’t enough to stimulate the housing market on their own, especially as banks use unrealistic credit criteria to push legitimate buyers out of the market and disadvantage borrowers.

During the FBAA’s annual conference, White said, “We need a more considered approach to credit policy because right now there are borrowers with the capability to pay a mortgage that is being rejected for a variety of reasons.”

White stated that banks are beginning to take action as they continue to lose business, citing Commonwealth Bank’s recent decision to lower its floor rate the second time in four months as an example.

 “Banks are being forced to act because the market is flat, and we will no doubt see that other banks will follow,” he added. 

“The FBAA has said before that the buffer used by banks is ridiculously obstructive to borrowers.

“In no way am I suggesting we loosen the credit criteria, but in an economy that needs stimulating, interest rate cuts are only a part of the solution.

He then concluded, “Denying legitimate and credible borrowers a loan due to credit policies that make no sense doesn’t help anyone.” 

Nov 15

The Role Of The Australian Securities And Investment Commission (ASIC)

By Editorial Team | Legal



Running a business is not that simple. There are important things that should be taken into consideration. In Australia, the government has established a government body to make sure businesses are well regulated. There are regulatory authorities for business as well as for the exchange market. They demand strict compliance with the different regulations that require each business must cooperate.

Recent news from The Adviser, ASIC had shed light on the upcoming RG 209 guidance. This aims to determine the changes and additions to the guidance that can be of help to the holders of an Australian credit license in order to understand ASIC’s expectations for complying with the responsible lending obligations.

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Nov 13

MFAA Released A Marketing Guide For Brokers

By Editorial Team | News

A broker’s association in Australia, the MFAA (Mortgage & Finance Association of Australia) has launched a Social Media Marketing Guide intended to help its brokers to take advantage of their online brand presence and better engage with their customers and attract new prospects.  

The Finance Brokers 101 Guide to Social Media was developed based on broker feedback. It was developed to help their members overcome the challenges of branding among the social media platforms, and on how to create relevant content. Real-life examples were given with a couple of advice from fellow award-winning brokers.  

Stephen Hale, the MFAA’s head of marketing and communications, has stated that the guide aims to help brokers “overcome the pain points of establishing and maintaining a presence on social media, and provide actionable tactics that help brokers to implement low- cost marketing solutions for their business.”

 “Great social media strategies are now a mandatory requirement to grow your business, so it is important to know your target audience and to get the foundations right from the start, Personal branding is one of the best tools you have to distinguish yourself from your competitors and show potential customers and referrers what you have to offer,” Mr. Hale added.

This Marketing Guide is also designed to help brokers understand the differences between each social media platform, how to target particular niches such as first home buyers or investors, and how to create relevant content for each marketing channel. It is important for brokers as it will keep them up to date with the social media trends to serve the different market segments.

“Social media should be a platform to educate or entertain, not sell. It is important to create relevant educational posts that are of value to get traction from your target market. This guide can help brokers learn how to create valuable social media material and information intended to build relationships rather than generating leads,” Mr. Hale concluded.

Nov 12

Is The Downfall Of Credit Cards Era Happening In Australia Soon?

By Editorial Team | News

The Evolution Of Payment Methods

Payment methods for goods and services have been evolving over the years. Going back to the old days where the barter system is used as a method of exchange before the use of money was introduced. Then after several years, Credit Cards was introduced followed by Debit Cards. Up to now, people still make use of Debit and Credit Cards. However, a new method of payment has been launched- Online and Mobile Payments. While more and more people use mobile phones in almost everything they do, this new mode of payment has been “the thing” in this generation.

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Nov 11

Government Urged To Take Action For Elderly Financial Abuse

By Editorial Team | News

The ABA (Australian Banking Association) is calling on governments across Australia to establish new laws to protect people from Elder Financial Abuse, as new research shows that 87% of Australians believe that they can do more at a government level to eradicate this form of abuse.

The ABA launched a campaign to Stop Elder Financial Abuse with the support of Bauer Media to fight against elder financial abuse with a new campaign reporting that 57% of Australians are concerned that someone they know will be the victim of Elder Financial Abuse.

The Stop Elder Financial Abuse campaign, which is backed by a petition, calls on governments across the country to take a stand that would protect people and provide support from this kind of abuse as well as establish a National Power of Attorney (POA) register to confirm if POA documents are legitimate and current and assign a safe place to report elder financial abuse.  

According to the ABA, 1 in 10 older Australians experience elder abuse in any given year.

The ABA is now inviting on groups, major organizations, and individuals to take part in addressing this major issue.

There are stories from bank staffs that there have been situations wherein they sometimes attempt to prevent when they see money being drained out from the accounts of the pensioners. They think that something is happening behind those transactions as the money is being used for items that are not in line with the elder’s needs and wants. Their pensions are being used for holiday getaways or expensive jewelry. However, the victim is unwilling or does not take any action to report what is really happening.

Russell Westacott, the CEO of Seniors Rights Service, has expressed his support on the new campaign. He stated that at least 2 to 3 elders every day are a victim of this abuse. Most of them take the blame that they let it happen and are often used by their son, daughter, or grandchild.

The Launching Of Financial Abuse Training For Brokers

The Stop Elder Financial Abuse campaign relies on the work that the ABA has been using to lessen Elder Financial Abuse.  This follows the ABA’s update of their Banking Code of Practice to introduce a higher standard of customer care when dealing with individuals and small-business customers.  

The Broker and Banking industries have agreed on a standard procedure to identify the signs of financial abuse in a co-borrower arrangement. Started on the 1st day of July, those in the mortgage market are obliged to take extra care with clients who may be vulnerable. It includes age-related impairment, cognitive impairment, elder abuse, family or domestic violence, financial abuse, mental illness, serious illness, and any other personal or financial situation causing significant disadvantage.

While disability, dependence on others, and dementia can represent vulnerability for older people, it is the combination of other factors, such as poor-quality relationships or low social support, that can increase the risk of Elder Financial Abuse.

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