Banks to extend deferral of loan repayments

Very Sensible

Banks to offer further four-month mortgage break to avoid September 'cliff'

 

There goes bank dividends, not going to help keep the share price up. People may find themselves losing both income and capital...

 

In the last six months I have seen lower:
- rent, tenants left seeking a lower rate;
- dividends, down a bit, a lot or cancelled;
- share portfolio;
- superannuation pension; and
- superannuation balance.
Couple this with a hefty CGT amount and cashflow is tight. While everything is still viable for the long term, I'm mindful that the Great Depression lasted about 10 years. It's getting to a point where less income means less spending, not the economic multiplier that many want. My PPOR reno is on hold until I can build up some cash.

In time there could be a jump in the number of foreclosures and evictions.. With banks tightening lending, that profit source will drop as well.

 

Sadly its a sign of the times

Our economy will and is suffering due to lockdowns. Though I think our economy was struggling prior to corona

Those who have high debt will feel the most pain. In Australia we have been drunk on debt, property and accessing equity to buy shares. Not judging but simply saying if cash flow has been ignored its going to be a bumpy ride

We have the second highest personal debt in the world

 

In my view it's not the amount of debt but the ability to service it that counts. To a certain extent the nature of the debt is also relevant. Borrowing $200,000 for a $500,000 IP with good rent is arguably better that borrowing $20,000 for a car.

I rather like the form of words "drunk on debt" - very apt. Ever since the GFC I've sought to have minimal debt, including for IPs. Now I have just the PPOR mortgage. The plan to have this paid off in three years looks more like 5-7 years. I'm comfortable with my debt, 8% of my total property and less with shares and superannuation are added.

This link
Households Debt to GDP - Countries - List
shows the debt to GDP. Switzerland is top. I'd rather live in Australia with 120% than Argentina with 5.4%.

 

If we can service debt fine, but when markets go backwards, property and shares your capital is also eroded.

Some people will find their debt will be greater than their capital ?? This happens when cycles turn if people have purchased close to peak

What does this mean? Cant sell, stuck with debt, treading water

 

I think it's a good idea too, but I would not like to have 10 home loans on deferrals... Unless I was the bank