The Government has green lit a Royal Commission into the Australian finance industry, after intense scrutiny into the conduct of the Big Four Banks.
The banks admitted that a commission would be necessary to help restore the public’s opinion of the banking sector, in the wake of recent scandals.
But will the Royal Commission have an impact on borrowers? Here is what you need to know.
The Turnbull Government has appointed Former High Court Judge, the Honourable Kenneth Hayne, to lead the commission.
Prime Minister Malcolm Turnbull, Treasurer Scott Morrison and Attorney General George Brandis said in a joint statement that his, “wealth of experience at the highest levels of Australia's judiciary makes him the ideal person to conduct this Royal Commission.”
So, what will the Royal Commission look into?
Well, Hayne’s job is to lead an investigation into the conduct of insurers, banks, financial service providers and super funds (but not SMSFs).
The Commission launched because scandals – including ‘dodgy’ finance advice, mortgage fraud allegations and life insurance improprieties – came to the attention of Government after public outcry.
Is there an impact on interest rates?
CEO of the Australian Bankers’ Association, Anna Bligh, said that because of the Royal Commission, the cost of borrowing may increase for Australian Banks.
As a result, borrowers with banks may experience higher mortgage rates.
Bligh was reported as saying in the Australian Financial Review:
“Australian banks borrow significant amounts of money overseas so that they can lend to people for mortgages and they need those costs of funds to be as low and reasonable as possible,” she said.
“This runs the risk that Australia will be seen as a more risky investment by global investors that can go anywhere. The risk is that they don't invest or suspend their investment in Australia or they put a premium on the price of those funds.”
We recommend speaking with a good mortgage broker before securing a loan. At Capita, we compare loans from many different lenders, then pinpoint a loan product that matches your goals and your circumstances.
We don’t have allegiances with any lender. Our only goal is to help you find the right loan for your particular needs. This doesn’t just mean finding you a loan that saves you more, it also means looking at the total cost of your loan, and the payment terms.
As a result, you have peace of mind that the loan you choose is the right fit for you.
If you already have a loan with a bank, come to us for a home loan review. That way, we can see whether you could be saving more and receiving more attractive terms on your loan.
If this is the case, we will organise to refinance the loan with your new lender. This is relatively simple and easy, but will require an hour or so of your time. But as a result, you may save significantly on the life of your home loan.
Don’t waste your money or time. Talk to us about getting started now.