Firstmac stronghold crumbles - removing actuals

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

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  1. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    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 Finance Strategist Business Plus Member

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    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

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    Tighter and tighter it gets....
     
  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Was bound to happen - good while it lasted.
     
  5. See Change

    See Change Well-Known Member

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    Potentially ....

    Sh....it

    Cliff
     
  6. larrylarry

    larrylarry Well-Known Member

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    So will other banks follow suit?
     
  7. D.T.

    D.T. Specialist Property Manager Business Member

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    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

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    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

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    Thanks guys.
     
  10. Speede

    Speede Well-Known Member

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    Bring on GFC 2.0
     
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  11. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

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    can it get any worse?
     
  12. Waterboy

    Waterboy Well-Known Member

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    Well it's not as global as you think it is.
     
  13. Speede

    Speede Well-Known Member

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    It is.
     
  14. cheekykoon

    cheekykoon Well-Known Member

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    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

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    For the market as a whole ?

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

    ta
    rolf
     
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  16. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    Ouch.
     
  17. Beelzebub

    Beelzebub Well-Known Member

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    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 Finance Strategist Business Plus Member

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    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

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    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

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    cashflow neutral in the new world is + 12% :)

    ta
    rolf
     
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