Government paying back mortgage debt

Discussion in 'Property Information Resources & Tools' started by hozi, 5th Jan, 2017.

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  1. hozi

    hozi Well-Known Member

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  2. TMNT

    TMNT Well-Known Member

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    Why is this guy still even allowed to have an opinion????
     
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  3. Terry_w

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

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  4. Hedgy

    Hedgy Well-Known Member

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    I love the part where he states "eventually I'll be proved right"....hahaha, I keep betting on horse 6 in race 6 at Randwick and while I've been doing that for the past 20 years and it has never won, eventually it will happen.
     
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  5. Ran Gus

    Ran Gus Well-Known Member

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  6. TMNT

    TMNT Well-Known Member

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    I have that same mentality for winning lotto
     
  7. TMNT

    TMNT Well-Known Member

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    throw enough **** at something, something will eventually stick
     
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  8. aussieB

    aussieB Well-Known Member

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    Just add this to the mix : Always bet on black.
    It must be true. It was in a movie :
     
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  9. Corey Batt

    Corey Batt Well-Known Member

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    >Throw out outlandish opinions to make media jump up and down
    >Keep name out there enough so can continue pretending to be a public commentator worth consideration (and employment)

    Effectively he's an education institution shock jock.
     
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  10. JetstreamVic

    JetstreamVic Well-Known Member

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    In part I kinda agree with him.

    Whilst we are all investers, therefore want our asset base to climb in value - At some point, it can no longer be sustainable.

    The banking sector in Australia, needs to be secure, especially seeing though we are all giving it tick of approval when we back funds in ADIs etc.

    A long time ago, it was only (X) years of your yearly salary would buy a house, now that value is (Y) and there is a large shift in where that value is.

    We need to govern against people doing stupid things, APRA is the beginning of that. What we are currently doing will only work so long as house prices continue to rise. And whilst they are rising, everyone who has already invested is loving the gains.

    Whilst I don't have the required background in macro economics to place a value on what the 'rule' should be, if we were to look at something like "You can only lend someone 8 times the value of their last years tax return + any income that will now be derived + any savings the purchaser may tip in", then you do three things.

    1. Tax returns are completed
    2. Tax returns are not 'lowered' to reduce the amount of tax paid (Cash economy dries up)
    3. You start to put a limit on what people can actually buy, and a ceiling on the money they have.

    Lets say for instance the average wage is 100k, 10 x 100k = 1Mil. All of a sudden 1 Mil (Or a little over with a personal cash injection), is the most the average house can cost.

    People simply then can not look at a house worth 1.3 mil, so if the 1.3 mil vendor wants to sell, they have to crunch. Then the house that wasa listed for 1 Mil, can not compete with the 1.3 mil house and downward pressure continues.

    It's not a nice situation for someone who has property as there will be deflationary pressure, at all levels, however the other outcome is lend more and more in the hope that property continues to rise.

    At some stage, there has to be a wall where the elastic band snaps and wage growth can no longer sustain the increasing house prices. Lets just hope that doesn't come at the same sort of time as rising interest rates, high unemployment, financial uncertainty.

    FWIW, I have always thought that there should be a linear equasion with credit cards, it would control peoples spending, and ensure that they do not then pay a large amount of their income in 'wasted' interest payments.

    To give you a real life example of how people are stupid, friends of mine asked me for some advice a few years ago to re-finance their P&I PPOR mortgage as they were having some cash flow issues. They went on a IO, and at the same time interest rates have dropped - Cash flow problem solved.

    However, every time they need money, they take from their offset - Which is now almost drained.

    What happens in a couple of years when the IO period finishes, they then revert to a high P&I payment than they were on due to a shortened loan term, they have no cash that they can tip in, interest rates have gone up a few notches? All of a sudden, the home that they built 10 years ago has to go on the market because they have no equity and it becomes a fire sale?

    People are stupid, banks are greedy and everyone is out to ensure they make money.

    Somewhere, something has to give.
     
  11. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Sooner or later Steve Keen will be somewhat correct. The problem is so far his property market predictions have been consistently incorrect. Eventually the property market is going to drop or have a correction, but unless there's a major disrupt such as a serious disaster or war, I don't see property values dropping by 40% or even close.

    Even if prices did drop by 40% today, you'd still be well ahead of his initial predictions. Many markets have more than doubled since he started making this prediction.

    He's often said things like, "I was correct, but then the government did xyz". I would expect that if someone is going to make market predictions, then they should also consider external responses and influences to market conditions in those predictions.

    He's an academic who's only doing half the job. He's not worth listening to when it comes to property predictions.
     
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  12. tobe

    tobe Well-Known Member

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    "What I want to do is bring in a range of bank rules which would limit the amount of lending you can give against an asset to some multiple of the income-earning capacity of the asset."

    That would make my job a lot simpler. Be hard on existing owners, but better than a property crash.