Tough times are coming for casual workers. The print of the Australian Regulation Authority’s latest guidelines shows the increasing number of non-full-time workers. It seems that many Australians make incomes while not having a full-time job.
The royal commission exposed some wrongdoings, and this resulted in the regulator prescribing higher lending standards.
Like mortgage lending isn’t already in a bad state, according to UBS economists, it will get even slower and this is going to affect some people.
Landing a mortgage is getting harder for full-time workers. Freelancers, however, have even tougher times waiting for them in the property market. The most recent APRA prudential practice guide on mortgage lending has a word to say: freelancers are going to have to take some reasonable steps to verify available income.
This was quite significant during the first two rounds of the royal commission, so people are waiting to see if these steps will be taken even further.
According to economists, it might be difficult for self-employed borrowers to get mortgages. Additionally, the mortgage lending market is down anyway, and it’s not going to change soon.
The difficulties will be harder for all Australians, not only on the workforce. Experts say that the Australian labour market is going to have a casualisation on a long-term. They point to the fact that part-time jobs are dominant nowadays and that the Australian workforce is in need of flexibility.
However, this isn’t an Australian exclusive thing. All over the world, the number of freelancers is increasing. Take the United States, for instance. Right now, freelancers represent 35 percent of the total US population. This number is expected to increase and possibly reach 50 percent by 2027.
In France, the number of freelancers has increased to 70 percent of the population during 2008-2015. During the same period, in the Netherlands, their number has grown to 52 percent, and in the UK to 49 percent.
Their number in Australia is not certain, but it’s continuing to grow.
Self-employed workers will have to prove their earnings by producing a tax return. It’s totally different from full-time workers, who use payslips to prove their income when applying for a mortgage.
Moreover, APRA improved the rules for major lenders on April 26. However, they give a warning. So, in order to strengthen the assessment of existing debt commitments and borrower expenses, there should be more rules in place.
So, searching for a mortgage is not easy, and the applicants may need to have their finances in a good state. In a recent report, UBS wrote that banks should take detailed information on customers’ living expenses. More responsible lending laws are needed and, therefore, the banks have to become more diligent.
So, as you can see, the number of freelancers is growing, which means that banks are going to try to keep them close. We’ll just have to see how they’re going to do this.