EVEN in the cool of the darkened cinema over the summer break, bankers could not escape their deserved opprobrium.
The plot of the movie, Mary Poppins Returns was premised on the pending mortgagee repossession of the London family home of Annabel, John and Georgie at 17 Cherry Lane.
The new boss of the Fidelity Fiduciary Bank, played by Colin Firth, ruthlessly sought to fraudulently repossess the grand terrace.
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The unflappable Mary Poppins and the three children saved the house from foreclosure, and their hapless father from humiliation, with the bank returning to the honourable banking practices of the past.
Perhaps the Australian banking royal commissioner, Kenneth Hayne got to take his grandchildren to the Poppins sequel, although Hayne was officially spending the Christmas break finalising his much anticipated report.
His exposure of recent boom time fraud and exploitation of borrowers by the big banks had already seen him deliver far more than the government and the public bargained for during the scandal-ridden hearings.
The hearings proved we can’t place much trust in our regulators, advisers, ombudsmen, nor the costly legal system to deliver justice and indeed the government to do their best for consumers.
Worryingly, Hayne’s final report will have far reaching consequences, and the banks could benefit from the grenade thrown into the mortgage broking industry, as home buyers will need to pay their mortgage broker.
Tom Ravlic, the author of Vulture City: How Banks Got Rich on Swindle (Wilkinson Publishing) due for publication later this year, wrote in The Telegraph last month that unquestioning, uncritical blind trust should not be afforded to lending institutions.
I’d suggest the borrowing public need to take responsibility too.
We know that most Australians spend more time on their footy tips than financial affairs, and are reluctant to pay for services.
I’d argue consumers need to spruce up their knowledge of financial products and the legal consequences of decisions. No one should care more about your money than you. The bank’s own swing towards more responsible lending in 2018 was certainly overdue, but went way too far. Common sense lending would anticipate property purchases typically trigger a more spartan lifestyle by the buyer than them continuing their spending habits from before. But last year we saw these discretionary lifestyle costs — such as Uber eating habits, Netflix and even any weekend betting slips — included in the calculations by over-reactionary lenders in their ruthless loan application reviews that refused loans or severely reduced loan capacity.
We now have a buyer’s market, except they can’t all buy what they previously thought they could afford because the banks’ reaction to the exposure of some reckless lending exposed by the royal commission.
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A couple with one child and a dual income of $120,000 could borrow $800,000 during the boom. Fast forward and the same couple, now with mild wages growth to $129,000 along with a second child, can only borrow $680,000 because of much stricter bank lending.
Their capacity to buy has gone backwards, and so too did prices, not surprisingly. This adjustment to price and capacity hit the market hard last year, but 2019 is likely to see buyers and vendors alike, become more accepting of the new landscape.
And there’s already talk among buyers’ agents that securing a bank loan had become easier this year.