Royal Commission-induced credit slowdown could push interest rates rise back to 2020: Shane Oliver
A Royal Commission-induced credit slowdown could push the next interest rate rise back to 2020, according to Shane Oliver, head of investment strategy and economics and chief economist at AMP Capital.
"We are only two weeks into the Royal Commission, but it seems a real risk around the issues of lax lending standards is that banks move to a far more rigorous assessment of applications for loans," Shane Oliver noted.
"This is most unlikely to cause a full-on credit crunch, but the end result could be much tougher lending standards and a slowing in credit growth.
"Its early days yet but it’s worth keeping an eye on.
"It could serve to further delay any move to higher interest rates by the RBA, into say 2020," Oliver suggested.
Oliver anticipates more rigorous attention to lending in terms of each applicant’s income, expenses, assets and other debts.
Rowena Orr, QC, the senior counsel assisting the Hayne royal commission, has already revealed serious breaches committed by the banks and mortgage brokers.
There have been instances where banks had breached their statutory obligations under the National Consumer Credit Protection Act as well as under the Corporations Act to provide financial services "efficiently, honestly and fairly."
There appears to have been a failure to ensure that customers were not disadvantaged by conflicts of interest.