Are we there yet?

Many of us have travelled thousands of kilometres with kids in tow. 

The most common phrase coming from them is “Are we there yet?”

Large numbers of our clients have been asking the same question. There has been so much press around the Royal Commission, AFCA, ASIC, Best Interest Duty (BID) and more recently statements from the government around mortgage restrictions and easing.
The answer : For many of you, the obvious question is are we there yet?

However, the not so obvious answer is that I don’t think we have even left home.This is not a doom and gloom message; it is rather a belief that there is a road to be travelled and that we are just starting on the journey. 

When the Treasurer of Australia, The Hon Josh Frydenberg made some pronouncements a few weeks ago about loosening of restrictions to make lending easier, our phones rang off the hook.  Many of you, our loyal clients wanted to know how that would make immediate differences to them and the potential to borrow. The actual announcement by the Treasurer was that the government will relax the tough lending laws imposed on the banks and move the onus on to the borrower, making it easier to get a mortgage. 

So the question is – What does that actually mean?

Stepping back a few days and weeks from the late September announcement, there was a new landmark court case, known as the “Steak and Wine” case.  This was won by Westpac against an argument from ASIC who said that Westpac were not strict enough in applying responsible lending. The case looked at whether future expenses, generally discretionary, are definitely related to past expense behaviour.

Wagyu and Shiraz 

Federal Court judge Nye Perram said in his judgement that “”I may eat wagyu beef every day, washed down with the finest shiraz but, if I really want my new home I can make do on much more modest fare.” 

The major shift in lending will be from a regime of “lender beware”, where lenders were overzealous in their application of ASIC regulations, to an environment of “borrower responsibility”.
In the new order, if customers claim they can get by without “Wagyu and Shiraz” then they (the customers) will have to be sure they are right.

Are we there yet? 

The answer sadly is no – the government will still need to amend or pass new legislation to bring this into effect. On a practical level, the banks may still ask questions around living expenses and affordability, but will more readily (we hope) accept that you as a consumer will change your lifestyle and spending habits in the light of taking on more debts.

The proverbial “Jury is out” and we will wait expectantly for the time we can say “Yes – we are here now”In the interim, please keep in contact with your broker on our team.

We are forever looking at ways to save you money by reducing rates or finding better deals.

Give us a call to see what we can do for you.

The house & home loans team; Rael, Ameesh, Mark, Harinder, Rachel, Libby, Adam, Trevor, Liz, Kate, Mushy and Natalie.

P.S – For those who have called the office over the last few years and spoken to Natalie, we would like to welcome Jaxon and congratulate Natalie and Luke on the birth of their first child. 

P.P.S – Any enquiries or questions please direct them to your broker or rael@hhloans.com.au

P.P.S.S – As always, for all your personal insurance and superannuation, please contact our sister company, house & home life – warren@househomelife.com.au