Banking Royal Commission - So what?
The Banking Royal Commission has uncovered some terrible instances of appalling conduct by banks and brokers. I hope that the outcome is a much better and fairer one for customers, and that predatory individuals, groups, or practices are addressed.
In terms of the mortgage broking industry, the Royal Commission is a continuation of trends in the past 2 years that have led to credit getting harder to obtain. Tougher rules on qualifying, tighter requirements to assess borrowers living expenses, and banks being stronger on "no exceptions" to their own rules. Also credit reporting is getting much wider, so there's far more of your financial history that is reported to lenders on your credit file. Overall the higher rigor in lending is a very good thing, but it has meant many borrowers are finding it harder to get their loan approved.
You can help yourself by being ready for lending. Keep your accounts in squeaky clean order, always pay on time (preferably by auto-debit). Minimize how many times you apply for credit, and how many accounts you keep open. Try and have a profile where you are saving what you'll need to make as repayments in your "future life" after you take the next property step. If you do this then chances are you have turned yourself into a perfect client to the bank, and you will find it much easier to get a loan.
I hope the Royal Commission doesn't come up with any radical outcomes that make the broker industry unsustainable. Brokers had about 25% of the Australian mortgage market when I started in 2001, and it's about 55% now. It's about the best customer outcomes. It's also a little known fact that the average mortgage broker doesn't earn as much as the average banker. There seems to have been a fixation in the Royal Commission on brokers earning commissions from banks. My (pretty informed) guess is a take home personal salary (ie personal ATO notice of assessment) of a mortgage broker is $50,000 to $70,000 pa average compared to $90,000 - $120,000 for a lending manager in a bank. If something like a "client pays a fee for broker service" was implemented then I'd be concerned about the viability of the broker market.
#brokersworkforyou #royalcommission #dontgivethebanksafreekick #findafairerdeal
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