In light of the recent Banking Royal Commission, many prospective borrowers have been left feeling uncertain about their chances of obtaining a mortgage or refinancing an existing loan.
The banking world was certainly rocked by the Royal Commission inquiry, which ran from late 2017 through to early 2019.
Throughout the whole duration, news outlets were predicting a lot of doom and gloom, lamenting the increased caution that would likely affect lenders, post-Commission. So, now that it’s all over and done with, many prospective borrowers are asking: “Has the Banking Royal Commission affected my chances of getting a loan?”
What Was the Outcome of the Banking Royal Commission?
The Banking Royal Commission consistently found that the Australian big banks had been engaged in “dodgy” dealings and had been guilty of irresponsible lending – in other words, they were issuing loans that people were unable to pay back.
As a result, many people expected that the Banking Royal Commission would lead to new laws governing the mortgage lending process. However, Commissioner Kenneth Hayne concluded that tighter regulations were unnecessary – all that was required was for the existing laws to be enforced.
In this regard, a lot of reproach was directed towards the Australian Securities and Investments Commission (ASIC) because part of their job is to ensure that regulations are complied with and to prosecute those who breach the law. Because they’ve been quite lax in recent years, the big banks have gotten used to getting away with things.
Has the Outcome of the Banking Royal Commission Affected My Chances of Getting a Loan?
In reality, the answer could be considered both “yes” and “no”.
This is because the Banking Royal Commission had an impact on the banking industry before it had even begun – lenders began tightening lending criteria pretty much as soon as the Royal Commission was first announced.
So, following the release of the Royal Commission’s final report the process for obtaining a mortgage hasn’t become more difficult – that already happened a few years ago.
Lenders have been displaying more due diligence in checking that a prospective borrower will actually be able to make the required repayments.
Rather than relying on the Household Expenditure Measure to estimate a person’s expenses, lenders are now focusing on a borrower’s actual spending.
This was noted by Steve Mickenbecker, the executive of financial services for Canstar Group. When commenting on the Royal Commission final report he stated, “one thing that it did do, which I’m grateful for, is it came out and said, ‘We actually think the banks have done enough in tightening up credit and we’re not going to hit them on the head and make them do more’.”
How Can I Improve My Chances of Qualifying for a Home Loan?
In light of this, there are several things that you can do to increase your chances of being approved for a home loan; focus on boosting your savings, minimising unnecessary expenses, avoiding job changes and reducing household debt levels.
For more information on what you can do to increase the likelihood of your loan application being approved, contact the team at North Brisbane Home Loans on 07 3889 9719 or via our online enquiry form.
Patrick Cranshaw, a Certified Mortgage Professional for over 21 years, founded North Brisbane Home Loans in 2002. His career began with ANZ Bank in New Zealand, where he progressed over 16 years to a Business Banking role in Virginia. After moving to Brisbane in 2000, Patrick led the QLD market for a home loan agency, helped set up the REMAX Real Estate Finance division, and practiced as a broker.
