Tighter credit in New Zealand is likely to be the biggest fall-out from Australia's Royal Commission into misconduct in the financial services sector, analysts are predicting.
The Australian Government is due to release the report findings publicly after 6.10pm today New Zealand time after financial markets have closed in Australia.
William Curtayne, a portfolio manager with KiwiSaver provider Milford Asset Management who is based in Australia, said there were seven key areas where he believed the report would make recommendations, but top of his list was further restrictions around responsible lending.
"Banks have gone quite far to improve responsible lending. But will that be enough?"
Tighter lending in Australia is already being blamed for the fall in house prices and a slow-down in the economy.
Curtayne said the focus on how consumers were able to service their debt had already flowed through to the New Zealand arms of the Australian banks in the second half of 2018.
"The question is whether the Auckland property market will follow Sydney and Melbourne downwards. That is the number one important factor for New Zealand."
Shane Solly, a fund manager with Harbour Asset Management, said he also expected it to get tougher to borrow money in New Zealand.
"We expect access to bank debt is going to get more difficult."
Solly pointed to banks in Australia cutting back on interest-only loans and said while they were not as prevalent in New Zealand, any cut-back could mean people suddenly could not borrow as much because they had to pay interest and principle off a mortgage.
"It's something New Zealanders need to be aware of."
Analysts are already worried about higher mortgage rates coming off the back of proposals by the Reserve Bank to lift the capital levels banks are required to hold.
Some have predicted the increase, which could result in the four Australian-owned banks having to find another $18 billion in capital over the next five years, could add as much as 100 basis points to mortgage interest rates - greater than regulators' predictions.
Curtayne said the reality would be somewhere in the middle.
But he warned the tighter credit market in Australia was already resulting in some small businesses struggling to fund themselves.
Curtayne said other recommendations that could come from the inquiry included civil or criminal charges against financial firms.
That would create a huge amount of media attention, he said, although it would have less of an impact on the economy as it would drag out the issue as it went through the courts.
He said there would almost certainly be recommendations around changes to vertical integration and how brokers were remunerated. Banks may not be allowed to own mortgage brokers or financial advice firms to prevent conflicted advice.
Curtayne said, structurally, banks in New Zealand were cleaner than Australia. But regulators here would be closely watching the findings.
"I think all of them are going to be investigated but in terms of immediate impact the changes around responsible lending are the biggest."
Sam Stubbs, managing director of KiwiSaver provider Simplicity and a critic of the banks, said more pressure on the banks in Australia from regulators could result in the New Zealand arms trying to re-coup costs.
"I think it is going to be pretty bad news for New Zealanders."
He said the head of Australian banking regulator ASIC had been explicit in saying there were going to be court cases and likely fines.
Predictions have ranged between A$2.5 billion and A$6 billion for making good on past mistakes.
"They will be trying to recoup those fines through charges to clients. Prices will go up not down in the short term."
He predicted Australian regulators would be beefed up, making the difference between them and the resourcing given to New Zealand's Financial Markets Authority even more stark.
"This will be the death knell of commissions for mortgages and investment products."
But that also meant consumers would have to face paying a fee in the future.
"In the short term, customers will end up paying for advice."
Stubbs said that would be better in the longer term as they would get sensible advice.
He also predicted tighter access to credit in Australia would flow through to New Zealand.
"It's pretty hard to see why banks wouldn't transport those changes to New Zealand."
Stubbs said banks were unlikely to roll over and accept significantly lower profits over a long period of time, which could put pressure on the Australian banks to milk their New Zealand subsidiaries.
"New Zealand has been the most profitable state of Australia for the banks for a long time - why would that change?"
Stubbs predicted that could result in an acceleration of branch closures, cost cutting and redundancies.