Join Australia's most dynamic and respected property investment community

Firstmac stronghold crumbles - removing actuals

Discussion in 'Property Finance' started by Corey Batt, 30th Sep, 2015.

  1. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,173
    Location:
    Adelaide, SA
    Effective from Wednesday the 8th of October, the Firstmac assessment rate is to be applied to all mortgage loans (home loans and investment loans) for serviceability calculations.

    Changes are detailed below:

    • The Firstmac Assessment Rate remains unchanged at 7% pa
    • A repayment buffer, or ‘stressed repayment’ will apply to other existing / ongoing mortgage repayments, and calculated using:
      • Firstmac assessment rate
      • The loan amount shown in A&L which is the facility limit, for example loan balance + amount available to redraw from the loan
      • A default loan term based on repayment type:
        • PI=30 year loan
        • IO=25 year
    With Pepper and Firstmac gone - there isn't too many options left for those in tight positions post APRA.
     
  2. Redom

    Redom Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    863
    Location:
    Sydney (West) and Canberra
    I've got a handful of deals in the pipeline - key dates for everyone:
    1. Applications submitted by Oct 8.
    2. Settled by Nov 30.
     
  3. euro73

    euro73 Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    1,444
    Location:
    Sydney
    Tighter and tighter it gets....
     
  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,159
    Location:
    Canberra and Sydney
    Was bound to happen - good while it lasted.
     
  5. See Change

    See Change Timing Lord Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    2,146
    Location:
    Sydney
    Potentially ....

    Sh....it

    Cliff
     
  6. larrylarry

    larrylarry Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,508
    Location:
    Sydney
    So will other banks follow suit?
     
  7. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,595
    Location:
    Adelaide, SA
    Other banks are already like that, so people who's circumstances suited it were using Firstmac
     
  8. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,159
    Location:
    Canberra and Sydney
    They have followed other banks.

    They were one of the last remaining taking OFI debt at actual. There might still be some small credit unions and mortgage managers - but their days are probably limited too.

    Cheers

    Jamie
     
  9. larrylarry

    larrylarry Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,508
    Location:
    Sydney
    Thanks guys.
     
  10. Speede

    Speede Well-Known Member

    Joined:
    26th Sep, 2015
    Posts:
    169
    Location:
    Google Armchair Expert
    Bring on GFC 2.0
     
    jim1964 likes this.
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,025
    Location:
    Sydney
    can it get any worse?
     
  12. Waterboy

    Waterboy Well-Known Member

    Joined:
    29th Aug, 2015
    Posts:
    326
    Location:
    Sydney
    Well it's not as global as you think it is.
     
  13. Speede

    Speede Well-Known Member

    Joined:
    26th Sep, 2015
    Posts:
    169
    Location:
    Google Armchair Expert
    It is.
     
  14. cheekykoon

    cheekykoon Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    103
    Location:
    Sunnybank
    Well, I think artificially restricting demand is actually good for the whole market. In Singapore there are many rounds if cooling measures, eg, 50% LVR for 2nd loan. 7% extra stamp duty for 2nd property etc. Prevents price from speculating too high by investors. Sit out and watch.
     
  15. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,172
    Location:
    Gold Coast
    For the market as a whole ?

    Gov intervention almost always has significant (usually delayed or hidden) downside to the expected upside.

    ta
    rolf
     
    Eric Wu, THX and Beelzebub like this.
  16. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    2,458
    Location:
    Sydney & Gold Coast
    Ouch.
     
  17. Beelzebub

    Beelzebub Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    572
    Location:
    Lost
    So how tight is tight. I keep on hearing about how stuffed we all are but if I am sitting at 80%LVR with a cash flow positive IP I should be okay to borrow again right?... right?
     
  18. Redom

    Redom Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    863
    Location:
    Sydney (West) and Canberra
    Not quite as simple as that.

    Those definitely help, but you'll still need to show to the banks that you can afford to meet loan repayments. The affordability criteria used has been given a real whack for investors.

    They're using a theoretical 'expense' level that is much higher. Its been buffered up on all the debt that you already have. For $1mill worth of debt, you're theoretical expense level has gone up by over $3k per month, a huge whack to your borrowing power.
     
  19. Beelzebub

    Beelzebub Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    572
    Location:
    Lost
    what would the theoretical expense level on $1mil debt have been before the change?
     
  20. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,172
    Location:
    Gold Coast
    cashflow neutral in the new world is + 12% :)

    ta
    rolf
     
    chylld likes this.