Mortgage broker/adviser links vital post-RC

In an interview with Sky News radio host Kieran Gilbert on Wednesday, Treasurer Scott Morrison remarked that government will need to “very carefully” watch for tightening of bank lending as a result of the royal commission, noting there is a risk this tightening could come at a bad time for housing markets.

“The commission will take its course but the response to it is what is really going to be the issue. We have got to be careful that we don’t create a self-fulfilling problem here,” he said.

“Credit is important in our economy. Our banks are the strongest in the world. So, this is a big financial asset for us. We don’t want to go and undermine that by creating unnecessary regulation which basically constricts and suffocates the economy.”

Responding to questions from ifa, Equilibria Finance managing director Anthony Landahl said the impact of the royal commission will extend to clients and affect their ability to obtain loans.

“A lot of the work being done now is coming from concerns being raised around affordability - so this is bringing a lot more attention that is filtering down to the credit assessment where more focus is on living expenses and more forensic analysis and data verifications on income and liabilities,” he said.

“For some it may impact their borrowing capacity and the amount they are lent as assessments and criteria are tightened.”

Consequentially, Mr Landahl said, advisers will need to work alongside mortgage brokers in order to help clients achieve their financial goals.

“In this type of environment the role of the adviser and mortgage broker is even more important to give consumers real choice and guidance to navigate the increasing complexities of the financial service landscape and lending environment,” he said.

“The main areas to be aware of are the tightening and more complex credit environment we are facing with respect to both owner occupier and investment loans – which may impact what clients can do, and that working with and aligning yourself with a good mortgage broker will help you and your client navigate the environment and enable them to obtain the best outcome for their situation.”