The tightening of the money screws has been happening for the best part of three years now, with the effects most stark last year in Sydney and Melbourne especially.
Therefore, it was pleasing to see that there were no recommendations to legislate credit approval processes for borrowers, with the commissioner actually saying that banks had already improved their practices in-line with responsible lending provisions.
The temporary caps on investor and interest-only lending have now both been lifted so we can only hope that a more reasonable lending policy is reinstated so solid borrowers can secure finance.
There is something seriously wrong with the system when borrowers with above average household incomes can’t borrow funds to buy a reasonably priced home or investment property.
Not only does this drag the property market down further, it also reduces employment in aligned industries such as the building sector, which is equally as vital to our economy.
The recommendation that commissions to mortgage brokers be paid by consumers rather than banks is concerning, given that brokers create much-needed competition in the lending landscape.
That recommendation, which the Federal Government has said deserves further investigation, has the potential to decimate a sector that employs thousands of people and provides home buyers and investors with better loan outcomes.
The banning of trail commissions to mortgage brokers seemingly because their job stops after a property is settled also does not have reflect usual practice.
Mortgage brokers are the first point of contact for investors about their loans for years after their finance has been secured.
Trailing commissions ensure that brokers continue to get paid to service their loan books.
The last year has certainly been a volatile one for the property market and finance sector with the royal commission adding to an almost perfect storm of bad news.
Now that the report is out of the way, hopefully consumer sentiment can start to heal, because without a more upbeat outlook, our economy may suffer even more.
There is no doubt that it’s well past time that the credit tap be turned back on to help restore confidence in our property markets – as well as in our economy.