It is great news to hear Josh Frydenberg’s comments on easing the banking sectors regulatory constraints.
With all Melbournians eagerly awaiting to restart the economy this is the time when the banking regulators need to reassess their responsible lending policies.
Since the GFC the regulators have made it so difficult that it is almost hopeless for many businesses, and individuals, in particular our youth, to make any headway into property ownership and financial independence.
With interest rates at an all time low property ownership is now extremely affordable but it’s simply not accessible to those that need it the most.
Are the stringent rules imposed on the banks by the regulators responsible or irresponsible?
From the perspective of instilling hope, responsibility, and encouragement into our children the regulatory impositions have been very damaging.
I do not know about the rest of you baby boomers, but we all had the opportunity to start investing in property at an early age. I bought my 1st house at 19 with a 5% deposit and an interest only loan for as long as I needed it. So instead of spending the $5000 I saved on traveling, I had a choice, I decided to invest instead and bought my first home for $95,000. That option was available to me back then because banks were not so regulated but unfortunately those opportunities are not currently available and haven’t been for a long time.
That investment of $5000 turned into $750,000 within 12 years. Without having the ability to obtain that assistance from a bank 38 years ago I would have most likely been in a very different financial position today. Most of our youth today see very little prospect of ever saving enough to get a start.
Whilst we all understand that our regulators have implemented these additional layers of compliance to safeguard our banking sector and economy from another potential GFC they have however simultaneously depleted our youth of the notion of hope, self-worth and getting ahead, and leaving no scope for the individual’s ability to initiate, adapt, improvise and sacrifice. Instead we have suffocated the spirit of our youth by setting barriers that have depleted the hope of opportunity and in my view attributed greatly to the deterioration of mental health and sense of worth.
For the sake of clarification, the GFC was manufactured by a corrupt financial regime and was a devised fraud that was always going to fail. Whilst our regulators want to protect our financial markets, and that is commendable, the imposition of the current restrictive parameters have in my opinion gone well over the mark and is now an overreaction as are most responses these days from our governments and authorities.
We have taken away self-motivation and the old adage of having a go. Instead, the “nanny state” mentality has festered itself so deeply in this country that the by-product will be our disillusioned youth and a generation that never had the opportunity to shine. We need to implement financial modelling to enable and encourage our future generations to engage and to make choices by creating the parameters for them to begin their financial independence and give them the responsibility of creating their own worth.
Recently I experienced first hand the impossible set of compliance for my own daughter to make a start and I really felt quite aggrieved at the hopelessness of the situation.
The regulators need to create an environment that will allow our youth to prosper. There is nothing more damaging than the prospect of hopelessness. Encouraging our children to take on commitment and sacrifice to create their own value is paramount. It is the responsibility of the regulatory bodies in conjunction with our financial institutions to provide the financial modelling that will encourage and enable our youth to start their journey. Increasing LVRs and providing medium term interest only loans is where it needs to start from.
We need to STOP trying to protect everything to the point where we suffocate initiative, courage and sacrifice.
Yes, not all will succeed but the majority will, and it will create leaders.
It’s really that simple.