Join Australia's most dynamic and respected property investment community

60 minutes doing a special on lending too much money

Discussion in 'General Property Chat' started by Beelzebub, 21st Feb, 2016.

Tags:
  1. Beelzebub

    Beelzebub Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    568
    Location:
    Lost
    Apparently 60 minutes is doing a special on banks lending people too much money. And guess what: It's the banks fault that people decide to take on risk.

    Here is a quote from the article:

    “What this has taught her is banks are throwing money at people in the good times and now in the bad times banks will blame the borrower and say it’s their fault for borrowing all this money,” Mr Coulthart said.

    (Ah... yeh. That's actually how it works isn't it?)

    Millions in debt and facing bankruptcy
     
    Ouga and Perthguy like this.
  2. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,556
    Location:
    Sydney or NSW or Australia
    Banks should be blaming the risk averse. If it wasn't for all those people who keep their money in banks, there wouldn't be anything for the banks to onlend for whopping profits.
     
    datto and Jake Milne like this.
  3. moridog

    moridog Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    170
    Location:
    WA
    There was a case in the (I think) District Court last year in which one of the big banks were forced to repay a couple who, via a shonky mortgage broker, were loaned way more money than they could ever possibly repay, based on fabricated income statements. The gent regularly calls the Real Estate program here in Perth. They sound not very well educated and I am not certain they even had legal representation but. My goodness, he was very determined this gent, and they won, against the odds.
     
  4. Cat

    Cat Active Member

    Joined:
    18th Feb, 2016
    Posts:
    31
    Location:
    Brisbane
    I would like to know who these dodgy banks are and the people that got these loans through? I can then ditch my over cautious bank and go with one that makes it easy to get loans.

    Getting our finance deal through for our last development took years to get it over the line with the banks too scared of the risk so it blows my mind how they get this through. Also what ramifications does it have on valuers? They seem so cautious already so one would thing in the valuer report they would have to talk about the risk of the area... one would think??
     
    Observer, Ezzo, Beelzebub and 4 others like this.
  5. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    13th Jun, 2015
    Posts:
    2,954
    Location:
    Perth
    This is part of the Kate Molony story - YIP Investor of the year then when things went south in Moranbah and values plummeted their equity plummeted about $3m

    I know banks often have a lower LVR for medium to high risk postcodes but when you are piggy backing the equity of another medium to high risk postcode (or the same postcode) then the house of cards crashes simultaneously.

    People who bought prior to the Moranbah (or any mining town boom) and judiciously saved those exorbitant rents for when the inevitable happened OR sold out when the writing was on the wall have done ok. People who thought those incredible rents would last forever and leveraged high against that have gone to the wall.

    Some of it is greed, some blind faith in responsible lending pre APRA, some of it is spruikers gone past ethical stances and MUCH of it is people simply not understanding the implications of serviceability and where the f0rk they expect to find the money if the tenant isn't paying the mortgage. To many it's obvious, if the tenant isn't then you are but the rose coloured glasses seem to be like beer goggles at 3am at the nightclub.
     
    D.K, S.T, kierank and 10 others like this.
  6. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,375
    Location:
    Perth, Melbourne, USA
    Lo doc product is available today, I am sure many use these and can not service loans?

    I would not call the product I used dodgy, however it is relatively simple to source a lo doc with competitive interest rates today and owned by one of the BIG 4. I certainly did not jump hoops and this was for developing/construction loan.

    There are other products around and interest rate will vary, I know some investors using this sort of product.

    Wow, it took 2 years for you to source finance ... that's unusual surely, perhaps it had something to do with the size of the project?? Area, seen as higher risk?? Commercial/Resi loan??

    Risk - I am pretty sure there are certain postcodes that Banks class as higher risk, therefore higher LVR required when buying, I think for mining towns it was perhaps 70% LVR.

    MTR:)
     
    Last edited: 21st Feb, 2016
    Xenia likes this.
  7. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,375
    Location:
    Perth, Melbourne, USA

    WM

    The mining town thing was all about timing. Winners and losers.

    Some made a killing and retired from cashflow, they got in early. The mining boom cycle started around 2001 in WA and was not till around 2010? that it came to an end. Not familiar with QLD mining boom, in terms of timeframe?

    There was an investor who posted regularly on SS buying properties in Karratha and Port Hedland at 250k at the beginning of the mining boom, they were laughing all the way to the bank as prices soared.

    MTR:)
     
    Last edited: 21st Feb, 2016
    Xenia likes this.
  8. Vixs

    Vixs Member

    Joined:
    18th Sep, 2015
    Posts:
    18
    Location:
    QLD
    Unless there has been fraud or deceptive conduct by a third party involved (a broker/lender that fabricated evidence of income/understated expenses or left out loans on applications, for example) then people need to take ownership of their crap decisions. There are no 'buts'. IF and ONLY IF there has been wrongdoing by way of fraud or deception does any blame get shifted to another party, and if you were involved in that deception then you can suck it up in that case as well.

    When you're a lender your job isn't to evaluate the likelihood of something being a good investment, your job is to evaluate whether the borrower is likely to be able to make their repayments or if there is enough collateral to ensure you get your money back. They're not your friend and they're certainly not providing investment advice - and if they are but it doesn't get put in writing, you shouldn't be listening to them.

    There have been a lot of lives ruined as a result of buying houses and investments in mining towns. Whether or not that's anyone but the buyer's fault? I guess that remains to be seen.
     
    S.T, kierank, allegria and 6 others like this.
  9. BigKahuna

    BigKahuna Well-Known Member

    Joined:
    24th Nov, 2015
    Posts:
    624
    Location:
    Sydney
    'banks... are “lending too much’’ and should be compelled by regulators to hold more capital.'

    Nocookies
     
    Beanie Girl and MTR like this.
  10. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,375
    Location:
    Perth, Melbourne, USA

    Everyone is responsible for their own actions, but I think we know this.

    ...but the plot thickens, I need to know the full story after tonight's show
     
  11. TMNT

    TMNT Well-Known Member

    Joined:
    23rd Jul, 2015
    Posts:
    1,388
    Location:
    Melbourne
    Ok i havebt been affected that greatly by mining towns

    But 24!
    Average income!
    10 ips!
    6.5m!!!

    Hth is that even possible!?!?!?!?!?!?!

    I get that greed plays a part but seeing a good investment in terms of figures or yields isnt always about greed.

    Naivitivity, innocnece, delusion, arrogance, over confidecne, guillable, unlucky

    Are all terms that come to my mind
     
    Jake Milne likes this.
  12. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,375
    Location:
    Perth, Melbourne, USA

    yes, of course possible it happened, with the right product and mortgage broker.

    it's not exclusive to mining towns, I have met and know investors who have lost everything.

    I am not about to judge, because most investors would be guilty including me at some point of at least one of the above traits, I am going to hell:)
     
  13. TMNT

    TMNT Well-Known Member

    Joined:
    23rd Jul, 2015
    Posts:
    1,388
    Location:
    Melbourne
    You know

    There are always doomers and gloomers
    Its always the same people

    Howevwr judgibg from how relatively unaffordablr australian capital city property has become. I feel that eventually either the growth will come to a crawl or there will be a correction of somesort.

    I doubt people predicted the gfc.
    And i doubt people are predicting a correction right now too

    But it wouldnt surprise me if something like this happened in the next few years

    And althougu im in a decent position i think i might struggle if interest rates all went up decently as well as a few vacancies and drop in values
     
    Barny likes this.
  14. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,375
    Location:
    Perth, Melbourne, USA
    It's actually both, banks do review the asset/investment and analyse the risk, they have certain criteria and properties are valued accordingly, that is why in certain cases banks require higher LVR, or they won't finance dependent on area and asset etc

    banks got it wrong clearly 70% LVR was not enough
     
    Last edited: 21st Feb, 2016
    York and Xenia like this.
  15. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,375
    Location:
    Perth, Melbourne, USA

    ...but we already have declining markets, Perth comes to mind, Darwin.
    Perth has had 4 consecutive deficits, Perth economy apparently worst in Australia followed by SA.

    Sydney has already started to fall, it's no secret.

    It's not all bad though, Melb still very strong
     
    Xenia and Jake Milne like this.
  16. TMNT

    TMNT Well-Known Member

    Joined:
    23rd Jul, 2015
    Posts:
    1,388
    Location:
    Melbourne
    Althogub perth and darwun are falling

    Until i see reports and evidence that syndey AND melbourne fall. I wouldnt really call it a correction or fall.

    I dont follow the sydney market much but what are some examples of solid falls up there?

    I stil see high auction clearance rates and above reserve sales in posh suburbs which usually are first to fall
     
    datto likes this.
  17. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    2,458
    Location:
    Sydney & Gold Coast
    I hope she discloses who it was encouraging her to buy there.
     
    Terry_w, Dwalsh and Perthguy like this.
  18. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    2,458
    Location:
    Sydney & Gold Coast
    I hope she discloses who it was encouraging her to buy there.
     
    MTR likes this.
  19. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,375
    Location:
    Perth, Melbourne, USA


    that's totally your call whether you agree or disagree, I am not here to convince you either way.


    mtr
     
    BigKahuna and Xenia like this.
  20. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,375
    Location:
    Perth, Melbourne, USA

    me too, I would like this guru to be exposed, I have a friend caught up with the same guru, it's like a cult, bad news
     
    BigKahuna, Xenia and Tyler Durden like this.