CBA says its OK to sing I owe I owe, but no more IO on > 80 % is my woe

Discussion in 'Loans & Mortgage Brokers' started by Rolf Latham, 19th May, 2017.

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  1. sash

    sash Well-Known Member

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    Redest du wieder in Rätseln in. Herr Rolf.....
     
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    I will translate for you :). Earlier you wrote

    Here ya go...it official now....a lot of broker put people into CBA as they were the quickest and easiest get loans......now it should get interesting...



    The green underlined bit.

    "Easiest" in what context relative to other lenders, here are some ideas but im sure with your borrowing volumes you can come up with some more ?

    LVR
    Serviceability
    Vals
    Niche Policy
    Speed to process and serve
    Pricing
    10 x etc​
    PS ( these arent my reasons, they may be yours)

    As an aside, WBC group likely has a higher % of IO loans on the books than CBA .................... i expect they too will follow other lenders like ANZ, Adelaide bank etc, that have extended similar restrictions

    Logic suggests that all APRA regulated lenders will need to manage IO application inflows sooner or later to keep under the 30 % cap.

    Id say that will happen within the next 60 to 90 days, since with the majors pulling up stumps on IO for > 80 % lends, I can only see that business drowning the remaining few lenders.

    ta
    rolf
     
  3. euro73

    euro73 Well-Known Member Business Member

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    Yep. As I have said... a conga line of changes coming.
     
  4. Possumcreek

    Possumcreek Well-Known Member

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    Won't they just move into the repo department?
     
  5. euro73

    euro73 Well-Known Member Business Member

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    You're forgetting that there are still a lot of high LVR P&I deals being written for PPOR/first home buyers etc. Just because there's a temporary reduction to I/O LVR's starting , in order for banks to get below the 30% APRA threshold, doesnt mean LMI ceases to exist.
     
  6. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    This policy change is hardly surprising. Anyone reading about interest only loans on this forum over the last few months should have been able to spot this coming a mile away - especially after the recent I/O rate increases.

    Every analysis I've done suggests that given the significant difference in P&I vs I/O rates currently available, people are better off simply paying P&I, even with investment loans.

    The only real benefit of an I/O loan is the short term cash flow benefit during the I/O period. After this point the loan becomes significantly more expensive and there is a serious risk that I/O loans can't be extended in the future.
     
  7. Marty McDonald

    Marty McDonald Mortgage broker Business Member

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    Oh dear, another CBA rant by Sash. Never had niches? you are hilarious. Just because they decided they didn't want your business (lets call it a personalty clash) doesn't mean they aren't a good fit for a whole lot a peeps.

    Those 1.50% discounts are still very sweet especially if you have some PPR debt. Capacity to borrow still higher than most too with actuals +25%. Service levels have been crapolla for months but back now.
     
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  8. sash

    sash Well-Known Member

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    ....coming from a broker with vested interests no doubt??........;)
     
  9. albanga

    albanga Well-Known Member

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    @sash care to eleborate and why you don't like CBA?

    A number of their policies clearly stand out from the crowd. I'm interested to know where you would advise someone with new employment to go?
     
  10. sash

    sash Well-Known Member

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    Their policies maybe more friendly for newbies....but they have also moved rates the most aggressively.

    Sure it is ok for a start but over the longer term they are crap. They suck you in and then ratchet up.

    For people to build a decent portolio people need to look past easy...too many brokers in my opinion are compromising their clients by putting them to CBA. Time will tell....but I know them only too well....much better options out there...
     
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  11. tobe

    tobe Well-Known Member

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    If by vested interests you mean actually understanding credit policy and advising investors and consuners on the best structure and cost effective solutions on a daily basis for approximately 15 years then yes, Marty is biased.

    Cba is going to match the market over time, like it has previously. It has moved on interest only loans, but it's still very much in the market compared to the rest of the big four.

    Not liking them is fine, but there is no argument they are worse than anyone else, and if you are trying to accuse someone of bias, then actually show some evidence.

    So cba pay more than other lenders? Are they easier to deal with? Quicker? What's the bias then?
     
  12. euro73

    euro73 Well-Known Member Business Member

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    Westpac have joined the I/O fixed rate "hike em up" train today Screen Shot 2017-05-22 at 5.49.33 pm.png Screen Shot 2017-05-22 at 5.49.44 pm.png
     
  13. sash

    sash Well-Known Member

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    Well let me put it differently....it might work if you want only 1-3 properties but to get a larger you need a different lender. If I listen to brokers..I would not have got where I have got to.

    Will be interesting to see what the new govt legislation does...
     
  14. euro73

    euro73 Well-Known Member Business Member

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    ST G have decided to play as well... but their Resi Investment 3 year P&I fixed rate should be noted below :)

    Screen Shot 2017-05-22 at 5.54.50 pm.png Screen Shot 2017-05-22 at 5.55.01 pm.png Screen Shot 2017-05-22 at 5.55.09 pm.png
     
  15. sash

    sash Well-Known Member

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    Yep......in preparation for racheting up variable rates on I/O loans.

    They need to get down to 30% quickly...so a stepped approach ratchet up fixed rate I/O first...then put up variable I/O.

    Keep IP P/I as they are or slightly lower...will reduce attrition....and will convert people to P/I without too much fuss as lot won't be able to move....;)..shooting fish in a barrell
     
  16. euro73

    euro73 Well-Known Member Business Member

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    No different to everyone else... they all have a 30% quota to meet
     
  17. sash

    sash Well-Known Member

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    Yes but CBA, WBC, and ANZ have the highest I/O......former two at 40-50%
     
  18. euro73

    euro73 Well-Known Member Business Member

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    Anyone above 30% has to get their volumes down, and keep them down..... CBA , Westpac and others will move early... so what? Last time everyone got APRAfied by the changes, it was AMP and macquarie going early, but within a few months everyone was where they were. This will be no different. They will all end up at 5 years I/O and at 80% LVR and I/O rates up 20,30,40 more bpts , before too long...

    This doesn't really affect a portfolio like mine, or yours... other than to turn 6 start cash flow into 5 star cash flow.... but for the newbies or for those still carrying dreams of growing a large portfolio, it will limit what they can do. Especially if their PPOR is already P&I, and their INV loans are heading that way fast.... All conventional wisdom about how to use loans and loan structures to build a portfolio will need to be completely re-thought... amazing how naked and impotent the capital growth/harvest/capital growth/harvest property investment business model starts to look when you take never ending I/O terms and ever increasing borrowing capacity away from it

    Unless they take steps to beat these changes by injecting at least "some" cash flow so they can reduce some debt and get some kind of buffer in place for the P&I future thats staring at them, they will be pretty well stuck for a looooooooooong time. And worse, it may mean they wont have the ability to even hold on to what they have...

    I've long advocated strong cash flow as being essential because of its powers for debt reduction, with the goal being to eventually borrow again. But it's rapidly evolving that strong cash flow is now becoming essential for many just so they will be able to hold on to what they have. Forget expanding or growing... its increasingly becoming about survival now.
     
    Last edited: 22nd May, 2017
  19. tobe

    tobe Well-Known Member

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    So it's just based on your experience? At a certain period of time, when the bank had certain policies that you think held you back?

    Do you think they ever change their policies? Do you think your experience translates to all investors, in the present time, with 1-3 properties?
     
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  20. RetireRich101

    RetireRich101 Well-Known Member

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    re CBA
    I have loans with CBA (some was Coloniel then) for over 15 years now. Have used majors and minor lenders, but I have to say CBA is the best for equity release/cash out when I needed few years back...They are not competitive of late, but this is happening to all banks post APRA.
     
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