Did APRA work??

Discussion in 'Property Market Economics' started by MTR, 23rd Mar, 2016.

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  1. Kangabanga

    Kangabanga Well-Known Member

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  2. Lacrim

    Lacrim Well-Known Member

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    Anything's possible but that was a diff situation ie emigration of people out of Perth due to job losses etc.
     
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  3. MTR

    MTR Well-Known Member

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    Read this today...... just when you thought it could not get any worse

    APRA is introducing a new rule in the coming financial year. Going forward, banks are going to look not just at your loan to income (LTI) ratio, but also your total debt to income DTI ratio.

    Banks are no longer going to be looking at your ability to service the loan you are applying for, but all of your debts, including other mortgages, auto loans, credit cards – the whole kit and caboodle.

    And they reckon they are going to cap debt at 6 times your income.

    We don’t know how ruthless APRA are going to be??

    MTR:)


     
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  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Already happening with many of the majors
     
  5. MTR

    MTR Well-Known Member

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    I should pay attention... been out of the OZ market... tough gig
     
  6. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    So with a #6XDTICap,
    A family on income of 200k can only go up to a max of 1.2mn of total loans (home/car/cc) ?

    Just imagine the effect of hard cap on Sydney/Melbourne prices?

    @euro73 what do you think of this #6XDTICap?
     
    Last edited: 5th Jul, 2018
  7. euro73

    euro73 Well-Known Member Business Member

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    Interesting to go back to the beginning of this thread and see how the estimations/predictions played out over 12-15 months.
     
    Last edited: 5th Jul, 2018
  8. TAJ

    TAJ Well-Known Member

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    I don't think it is ruthless, I think it is prudent.
     
  9. hobartchic

    hobartchic Well-Known Member

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    I personally think that is eminently sensible. They should have always been going through people's debts anyway.

    Otherwise you have someone with 50 K credit card debt who then takes on more debt and is bankrupted in short order.
    Kinder to encourage them to pay off the credit card, and then buy a house.
     
  10. Barny

    Barny Well-Known Member

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    It will do more than just Syd/Melb, think of all other states in higher priced brackets that buy more than 6 times their income.
     
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  11. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    agree It will,
    with Sydney house median price around 1.1mn, a hard cap like this, practically makes Sydney houses beyond reach for both investors/ppor buyers with an average family income of 200k. It just stops them from buying any more IP till they repay a significant portion of existing debt.


    Is my understanding of #6XDTICap change and its impact incorrect?
     
    Last edited: 5th Jul, 2018
  12. MTR

    MTR Well-Known Member

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    Perth and Darwin already a basket case
    Melb/syd slip sliding

    Bris - zip, still waiting for boom, this will knock it on the head.

    Adelaide - zip

    As I have said many times, if you cant source finance you cant buy, which means more supply comes to market

    Oversupply
     
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  13. Marg4000

    Marg4000 Well-Known Member

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    It appears the focus is now on borrowers actually repaying debt, or at least being able to within comfortable parameters.

    Rather that previously, some borrowing more and more IO, not repaying anything, leading to an ever increasing spiral in borrowings. All good fun until the merry-go-round stops, which it inevitably does.
    Marg
     
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  14. Graeme

    Graeme Well-Known Member

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    Bear in mind that the median household income is around $90K, so a family bringing in $200K is likely to be in the top 10%, possibly top 5% of the population. Despite what the politicians and media tell you, it's not the average. :)
     
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  15. Illusivedreams

    Illusivedreams Well-Known Member

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    It's strange that has always happened since our first loan 12 years ago.

    We were with Commonwealth Bank I had to close my visa card as it had a $25,000 limit and had a huge burden on borrowing capacity

    So we closed card and problem. Was fixed they didn't even care that their was no money owing. As far as commonwealth Bank was concerned the fact that was available was the same
     
  16. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    From what I've read, the average individual income is about $80k - $90k. That would suggest a household income is getting close to $200k.
     
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  17. Illusivedreams

    Illusivedreams Well-Known Member

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    According to news. Com. Au
    the average weekly wage for an adult in Australia working full-time as of November 2017 (before tax) was $1567.90

    $81,500per year per person $163,000

    Aussies are loaded by World standards


    From same source
    Meanwhile, the top 10 per cent of employees earned more than $2109 per week. If you’re on a salary of $109,668 a year or more,
     
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  18. Graeme

    Graeme Well-Known Member

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    We're probably disputing different ways of calculating the average. The $60K figure is the median, whereas $81.5K is the mean. This article from Greg Jericho in The Guardian suggests I'm pitching it a bit too high.
    This diagram from McCrindle shows the distribution of income and wealth. I think that the figures show the average for each band, rather than the entry points, and a household bringing in $163K would likely be on the line between the fourth and highest quintiles.

    Household Income.png

    It also shows how the average (mean) income and wealth is skewed upwards by the rich. That's why the median, or middle point, is often used in these discussions.
     
  19. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Not strange at all, thats the way its been for a loooooong time.

    If one has x amount of hard debt on a card, at no stage did lenders ignore same since I have been in this industry.

    ta
    rolf
     
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  20. qak

    qak Well-Known Member

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    I thought they used the actual limit (not balance) on cards or facilities, even if unused?