A three part blog series on Banking Royal Commission and basically WTF is going on with Aussie Banks!
Have we all been swallowed up into this big black hole called the Royal Commission?
If you have been living in Australia for the last 6 months then you would have heard the of the Banking Royal Commission. This is the government telling the banks that they are the ones ultimately in control of the banking system and that the banks have been playing their own game for too long – including a fair bit of ‘ball tampering’. The federal government is trying to squeeze this culture out of the banks and moving forward that they start to play a fair and honest game. It should have the banks playing on a more open field and disclosing more to us but let’s see if this actually happens.
The Royal Commission is also looking into the banks gouging profits, un-fair credit card fees and their whole operation with insurance and wealth creation platforms. Check out this article from the ABC which gives a good overview.
So what does this all mean for the me, the property Investor? It hopefully means that the banks will clean up their back yard so to speak and they will look more closely into prospective clients looking for a loan and their ability to re-pay it. This is basically going to mean tighter lending, higher LVR’s and the need for greater deposits, it will also mean more paperwork with applications. The banks will probably want to see more bank statements, transaction accounts, as well evidence of the bills you pay and a more realistic monthly living expenses budget. For the every day honest law abiding Australian applying for a loan this is not going to mean a great deal other than the fact you may need a bit more cash to get you going.
What it’s not going to do is stop the strong Aussie economy, stop people buying property or stop people from going to work and living a quality life in Australia with free health care if you’re sick and a pension or unemployment benefit if you are looking for a job.
Food will still be plentiful at the supermarkets, you will still be able to afford your cappuccino in the morning and there will still be money to be made in property investing
Life will still go on!
As a property investor you should not put your head in the sand, put a hold on your investing and do nothing…… instead – redefine your limits, set and adjust goals, look at other strategies, different structures, other locations. There is always a starting point! If you can’t control it don’t worry about it, find a way to make your goals transpire.
Stay tuned for part 2 of my series – Cheers Chris