• Personal Finance Basics

The Hayne Royal Commission has dominated the news for the last year with stories of banking and financial services misbehaviour. Now that the report has been issued and the rubber is starting to hit the road what does it mean for people struggling with debt.  

1.    Debt Consolidation will be harder to get

a.    Banks and other lenders were raked over the coals for irresponsible lending. Not using peoples individual expenses and in general lending too much.  Moving forward it is likely that having a large number of debt banks may view as evidence that you are struggling financially and therefore should not get a new loan. If you do get a loan, the loan will be smaller than would have previously been approved, as the expenses used in calculating borrowing capacity will be based on your actual expenses.

2.    Mortgages will be harder to get and smaller.

a.    Mortgages will be harder to get, and I would expect that a larger deposit will be required and a demonstrated savings history will be needed.  Expect your personal expenses to be reviewed. I’ve already heard of mortgages being turned down for spending too much on Uber Eats and not disclosing “pets” (the purchaser bought a friend a present at a pet store and didn’t have a pet)

3.    Market-share of banks likely to increase.

a.    Mortgage Brokers were the primary way non-bank lenders got clients. The Hayne Report effectively shut down Mortgage Brokers, which will mainly effect Non-Bank lenders and give market share to the banks.  

4.    Interest rates going up.

a.    Interest rates are going to go up. Banks will have less competition and it’s reasonable to think that interest rates will go up.

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