Recently, I’ve been asked about what I think of the banking royal commission (BRC), what I believe the outcomes will be, and how it will impact the market.
I have been a mortgage broker for a while now and when I started, if you wanted money, banks couldn’t get you approved fast enough! Pastures were very green. Fast forward to 2018, and times are still good!
It’s important to understand the restrictive measures that were already being applied in advance of the BRC, these were contributing to the slowing of the market before the BRC even got started:
- Servicing or qualifying calculators have regularly been revised to ensure that every Australian with a mortgage will not file for bankruptcy should a minor adjustment occur in the economy
- Living expenses – The reporting of living expenses on finance applications that has constantly been changing and upgraded since I started as a mortgage broker
- Investment lending – governing bodies stipulated that a bank’s investment lending should not exceed 30% of its overall lending
- Interest only repayments – Restrictions applied in an attempt to slow investor behaviour and attempt to control/reduce household indebtedness
- Exit strategies – were on the increase. An exit strategy demonstrates you have planned for your financial future, and have a plan to eliminate debt at the time of retirement
Was there a need for a BRC? Yes, absolutely. It’s no secret that banks have been having a great time on your dime!
Will banks change their practices? I hope so. However, written throughout history are examples of where there are big $ to be made, corruption and wrong doing are a constant presence, regardless of industry, laws or culture.
What do I tell my clients when they ask me about the BRC and outcomes? Simple…. A bank is a vehicle. A method with which to achieve your goals and financial freedom. They use you to make a profit for their investors, you should use them to make a profit for yourself.
I could go on for pages, but I’d rather shout you a coffee or a beer and have a chat in person! Give me a call. We are located in Palm Beach on the Gold Coast, however we operate on a mobile basis, and are happy to meet you anywhere convenient to you on the Gold Coast QLD.