"Borrowing crackdown could mean an $80k income makes you eligible for a $200k loan"

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Borrowing crackdown could mean an $80k income makes you eligible for a $200k loan

This article is currently trending on iphone top stories, but if this really was implemented then the lack of leverage would kill property investing while active..

As a side note, if a credit crunch does result from this royal commission, would it be better to lock in pre-approvals now while serviceability is higher?

 

pre-approvals generally last 3 months only.

 

I can Only Imagine rental yield sky higj than Rocketing more.

Muahhhhhaaaaa

How does. A. 15% yield sound

 

As Terry indicated, pre-approvals only last 3 months.

I've also found that after about 6 weeks, or after a policy change, lenders are re-assessing. A pre-approval doesn't lock anything in these days.

 

That would lock first home buyers out of all capital cities. Developers would stop building supply as it would no longer be viable. Prices would eventually crash.

 

We are going into a very uncertain era of lending/borrowing, many things are in the air, media are fueling these speculations (for their own interests), banks are not making it clearer, somke mirror, finger pointing....

Well, let's see what plays out.

Still the most effective way is to increase your income and reduce debts. These 2 are the fundamental ingredients (plus available cash).

But, ppl are still looking for opportunities, life goes on, lost opportunities will not come back, lost time can not be regained.

 

But if we assume @2FAST4U is correct and FHBs can't borrow more than 200k on a 80k salary. Most FHBs don't even earn 80k. FHBs won't be able to enter the market. Not sure how this will work for Sydney and Melbourne.
Maybe parent guarantees will have to be given? It's not going to be a solution for all FHBs though.

 

Good question,

is that the topic that has been used by pollies, unions, different social groups, "Advocate committees" over a long period of time?

They all had their says about it, they might all have gained somethings they intended to get. Good or bad, pure intentions or not, hidden agenda or not.

Then it leads to another argument between generations, the baby boomers, the Gen Y, Gen X, Gen Z, ......

Oh wait, are we getting somewhere?

 

Banks don't take income guarantees from parents, but only security guarantees. Therefore this won't help serviceability.

 

It would be good if they did start allowing income guarantees.

The other options would be for a parent to go on title - say 10% ownership or the parent to gift to the kids.

I have set up a few clients who essentially could not borrow from a bank but who borrowed from a parent's LOC to buy their property. The plan is to latter refinance it with a bank.

 

From my understanding that 80k income figure was for supporting a family of 4
Homebuyers' borrowing capacity could be cut by up to 40 per cent

Is that right? I skimmed the article.

 

the minimum living expenses for a family of 4 would be around $4000 per month. That doesn't leave much room for tax and loan repayments.

 

What is the HEM scale for a single person on the same income?

 

Prices would fall dramatically if any of this was implemented and what does it achieve for the whole economy is the question...

 

Yeh agreed, thats why i remain skeptical of its full implementation and know the banks will find a way round it to attempt to preserve their profits

 

Or you could just sit back and watch the "market" deal with it when we have another major economic shock to the system, like the GFC, they tend to happen on a regular basis, , its been 10 years since the last one , it might be another 5-10 years to the next one,and they can be rather brutal to countries that are deep in debt.
Much easier to deal with it on your own terms and in 5-10 years wages might catch up with houses, if they can control the lending practices.
Around the period when interest rates hit 17% in the late 80s, investor activity dropped by about 40% for almost 5 years and in real terms house prices hardly moved for about 6-8 years in many parts of the country, some areas lasted even longer.

 

I can see Elizabeth and Davoren Park would become very popular for FHBs.