I'm here with another interview with David Cluning a mortgage broker. Thank you David. Thank you. And David tell us a bit about yourself here experience history and working with investors and so on.
No problem we got an hour don’t we. I look I have been a finance broker for about 12 years now but have been in finance for about 30 years prior to being a broker I was with Westpac for about 12 years and then got headhunted by the Hong Kong bank HSBC in the early 90s when the regular of the industry was regulated by a regulator I should say by Paul Keating so I went work with HSBC for about five six years. Helped set that organization up here in Australia with branches throughout Melbourne Sydney Brisbane Adelaide Perth and then I left banking. At that point in time for various reasons I'd been in it for about 15 16 years. And after that I then had various roles which are which you know my mainly marketing roles actually so my background really is marketing and finance. But I then drifted into the property area. So I was doing a lot of seed capital funding for organisations that were basically building developments and I did that for about two or three years and then I basically then yeah I drifted back into broking so I started to do a bit of property development myself and as a result of that finance kind of back into my life and so I felt that the finance broking and helping helping individuals couples families small business owners with all that said here sounds like you know what you're doing and you've got the experience so you've got plenty of experience.
Yeah. And where do you see the the market at the moment especially with investors. What's happening. Yeah look it's as you've read in the media the possibility of the market's really tough on a couple of fronts the property pricing has come down as it had to the increase in property values in the last five years was astronomical and probably the fastest increase I've ever seen in my time. You know some properties were doubling in price in three and four years in some areas particularly in the Melbourne and Sydney markets which are the larger two markets and so. Property prices have had a correction and have come down probably around about 10 11 12 per cent in those two markets and it's probably small reductions in the lesser of smaller markets of Adelaide and Brisbane. So look at the property prices have come down on the back of that we also have a credit squeeze at the moment with the banks.
We've just finished with the royal commission but the credit squeeze was really on before. Yeah,it was and from your past experience as you just explain to us Well how bad was it in comparison to last one? Yeah look it's probably the GFC time was the last time that we probably had the foot on the brake with finance and even property you'll see the drop of property this time ran is greater than the drop in property during the GFC. That's driven by the fact that property growth was so so large so quick but the lending. Yeah look it's tight. It's tight and the Government's tried to slow it down through regulation of the banking industry is now heavily regulated by the government in terms of that flows on to borrow policy what the banks will do in in lending. The one of the biggest changes has been individual living expenses. Yes and unfortunately there's been a little bit of shadow boxing there because the banks have had a reaction in my opinion that they got a little bit too far with living expenses and frankly the living expenses alone is creating in the industry what we call mortgage prisoners. So the person who in the past would be able to refinance from one bank to another and get on a reduced rate. I mean I've got examples of clients who are currently on four point six four point seven for their owner occupied loans trying to get them down to three point six three point seven but can't move them because the living expenses now being deemed and being formulated by the banks. Killing the deals and we can't do the refinance if I don't even qualify for the loan I got I don't qualify for either going under current policies which is a real concern. So where do you see it going for the rest of the year.
Look we've got an election in a two weeks time a little bit little over a week's time where the labor liberal getting in obviously but I think we've got to get past that. There's there's a lot of instability at the moment and uncertainty. Consumer confidence is very low. And I know we spoke about inflation and we've spoken about unemployment for this interview and look they're still quite strong. But I think it's consumer confidence is the problem. So once the election settles down we get through winter we start to move into that spring period. I think you'll start to see a bit more activity in the marketplace particularly with properties I think the forecast is saying that properties will probably come off one or two per cent this year but they'll start it'll start to bounce back in 2020 and then in 2021 you'll see property prices starting to climb back up again. So for the rest of this year I think it'll still will be a little bit of consolidation. I think that people will still have to continue to look at their own personal budgets which they should anyway but they'll be that continued pressure by the banks to ensure that you're financially responsible for your for your debt and and for your own home loans and business loans and yes I think it'll still be a period consolidation for the rest of this year until we head into next year.
All right. So it's a little bit of more pain for the short term. Yes it's not the end of the world. No it's not. Yeah you're seeing this happen the number of times where I'm just another part of the cycle correct. Yes that's the way it's a cycle. You know as property always goes back to property prices I think both in cycles and property prices and as we've seen they've gone up over the last 50 years have gone down but slowly to increase. The other thing is the wages and I wages have been going up for for a number ofyears but they haven't in the last two years wages have come to a standstill and that's putting pressure on consumers and I think the other thing that you know in terms of living expenses you know the cost of electricity and petrol and things like that are starting to bite a little bit now. Wages have stagnated so again compared to consolidation and I think next year the creditsqueeze we're currently experiencing with the banks will ease and lending may become a little bit easier as a finance broker.I'm hoping that's the case.
