Banks are cutting IO loans with more looking to accept IO on their books

Discussion in 'Property Market Economics' started by Tenex, 7th Mar, 2018.

Join Australia's most dynamic and respected property investment community
  1. Tenex

    Tenex Well-Known Member

    Joined:
    14th Aug, 2015
    Posts:
    570
    Location:
    Sydney
    Banks cut interest-only rates

    More banks are cutting IO loans and more banks are looking to accept more IO loans.

    There has been post after post on here predicting 6%+ interest rates by now linking IO loans to a property crash and what not. I was perhaps the only user who called it wrong.

    Anyway, this is great news for property and in particular first home buyers across Australia.

    I would not be suprised if we have another mini boom in particular in areas where employment is strong.
     
    Zoolander and Ben_j like this.
  2. AlexV_Sydney

    AlexV_Sydney Well-Known Member

    Joined:
    12th Mar, 2017
    Posts:
    517
    Location:
    Sydney
    Not true. I told you that on 21/12 - IO/IL rates may be lower when banks reach the target set by APRA. And this happens. And that was expected by many members here - no surprise. In short term. In long term the trend and market expectation is "up". What is unknown is when RBA moves the rates up. They forecast it by early 2019, but it depends on many factors... it can be earlier, or flat for a few years, or down if there are evidences of recession / deflation.

    If popularity of IO loans goes up again, the rates will go up as well for sure. The market just wants to find the balance for P&I / IO market share... till that moment the rates may go up and down.
     
  3. Tenex

    Tenex Well-Known Member

    Joined:
    14th Aug, 2015
    Posts:
    570
    Location:
    Sydney
    Ok
     
  4. TMNT

    TMNT Well-Known Member

    Joined:
    23rd Jul, 2015
    Posts:
    5,572
    Location:
    Melbourne
    For the economically not so expert

    At the peak of a boom. The rba or whoever always tries to stop it getting to bubble.
    If I recall last time was cutting fhog. Raising rates.
    But I don't recall any difference between pi and io.
    I do recall the abolishing of no and lo docs

    Why is it different this time?

    And if the bodies artificially slow the boom down. Then they're predictable .... It should be east for smart people like us.
     
  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,599
    Location:
    Gold Coast (Australia Wide)
    BASEL IV

    preparation

    ta

    rolf
     
  6. AlexV_Sydney

    AlexV_Sydney Well-Known Member

    Joined:
    12th Mar, 2017
    Posts:
    517
    Location:
    Sydney
    RBA made it clear in their media releases. They want lower rates for economy and at the same time to have some mechanisms to limit the growth of household debt, not supported by wage growth.
     
  7. TMNT

    TMNT Well-Known Member

    Joined:
    23rd Jul, 2015
    Posts:
    5,572
    Location:
    Melbourne
    So why Dont they do the same thing each time?

    Why change it if it works?
     
  8. Tom Rivera

    Tom Rivera Property Manager Business Member

    Joined:
    1st Jul, 2015
    Posts:
    2,718
    Location:
    South East Queensland
    On such a massive scale, the intricacies of every situation is different, and we learn from our mistakes.
     
    TMNT likes this.
  9. TMNT

    TMNT Well-Known Member

    Joined:
    23rd Jul, 2015
    Posts:
    5,572
    Location:
    Melbourne
    One thing I have noticed is that they last time cut low doc and no doc. And this time they didn't bring it back in.

    I wonder if we will ever see the likes again
     
    Tom Rivera likes this.
  10. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,599
    Location:
    Gold Coast (Australia Wide)
    Lo doc still exists

    no do still exists

    Just the types of policy and lenders offerings same are prett different

    Old Macq bank had a great no doc ................... you wont be seeing them do soemthing like that, or any form of lo doc where the actual income can be verified to some okish way.

    ta

    rolf
     
    TMNT likes this.