Economic experts have differing views on this question but most believe that the fallout from the commission will have a downward effect on property prices in the short term at least.
What did the Royal Commission uncover?
The Royal Commission’s mission was to look for evidence of misconduct, unethical behaviour or a failure to provide a duty of care within Australia’s financial services industry. The big four banks together with other loan providers were investigated.
Numerous examples of poor conduct by the banks and financial planners were discovered. Irresponsible lending and a repeated failure to verify customers’ living expenses before lending money was revealed.
What are the consequences for loan approvals?
As a result, the Australian Prudential Regulation Authority (APRA) has requested that all lenders tighten their lending standards and endorse stricter credit controls. Banks now need to demonstrate that they have carefully calculated each client’s capacity to meet loan repayments by better understanding individual living expenses. The result of this is already evident with loan approvals taking longer to process and buyers seeing their loan application rejected or not being approved for as much as they’d hoped.
What Buyers should know
- Expect your loan approval to take longer!
- Get organised early so that you don’t miss out on your dream property. Establish a household expense file, as you will need to provide greater evidence to the bank than ever before.
- Shopping around for the best loan provider will be essential. Mozo (a financial comparison website) has just released its Experts Choice Home Loan Awards, showcasing the best value mortgages of 2018. This could be a good place to start and a selection of the winners can be found by following the link https://bit.ly/2mp5QwA
What Vendors should do
- Find a local and experienced real estate agent that you can trust and communicate with. Start your search by visiting Open Homes to see agents in action and read their online reviews and testimonials. Follow the link to see what questions to ask an agent before signing with them https://bit.ly/2A1svbJ.
- Preparing your home for sale is crucial if you are to attract keen buyers. Your agent will be able to advise on any home improvements required and styling decisions.
- Accept that it may take longer to sell your home and be prepared to negotiate.