How APRA have changed your ability to borrow

Discussion in 'Loans & Mortgage Brokers' started by Redom, 31st Aug, 2015.

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  1. Elives

    Elives Well-Known Member

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    this most likely has been answered before, with the new assessment rates of other banks loans at 7-7.5% p&i will these rates go up when the interest rates go up? or will they stay the same?

    i'm assuming they will move with the interest rate?
     
  2. Redom

    Redom Mortgage Broker Business Plus Member

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    Most have a floor rate now, so they may move up if there are a few rate rises, but won't move down if rates fall further.
     
  3. patience

    patience Member

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    Thanks for your thoughts Redom!

    What are your thoughts on short to medium term GC if this is to become a slightly more permanent change? Surely it will put a dampner on things?
     
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  4. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    Well done Redom. Is a book on cards? :)
     
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  5. Waterboy

    Waterboy Well-Known Member

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    And get charged 28% interest.
     
  6. Observer

    Observer Well-Known Member

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    Great post Redom! Thank you for sharing your thoughts.
     
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  7. Redom

    Redom Mortgage Broker Business Plus Member

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    Despite some of the changes looking very big on the charts, this will impact investors with significant holdings more than most. Given the breakdown of the market shows that this is a relatively small subgroup, i don't think you'll see a complete taper of in growth in investment rates.

    Funding is still very very cheap.

    In the longer run, i do personally believe it'd be impossible to have the same 30 year growth story without credit exploding again. I don't see much room for credit to go much further, so would suspect the longer term trends to be very different. I don't think thats particularly groundbreaking, you can just map out income growth over 30 years (say at 2-3%) and historical house price growth (say 6-7%) and realise that a repeat isn't happening -continuation of those numbers again would show a crazy mismatch between affordability and prices.

    Cheers,
    Redom
     
  8. Gaby

    Gaby Well-Known Member

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    Awesome post! thanks for your insights very beneficial
     
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  9. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    Cheap and easy credit is the glue holding our house of cards,
     
    Last edited: 2nd Sep, 2015
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  10. mcarthur

    mcarthur Well-Known Member

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    Good points and really well said.

    I'm expecting (and hoping) that instead of historical house price growth of 6-7%, the good ones will be at 6-7% while the pack is back at 3-4% - barely above inflation + costs. So picking the "good" will be even more important.

    For example, I'm cogitating on whether the maxim to buy average in a good suburb and get pulled up/along with the good ones will still be correct. It may be that the average in a good suburb will still only move a little, and you really need a good one - school + transport + house etc. - to see what will be the good return.
     
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  11. Mitesh Dedhia

    Mitesh Dedhia Well-Known Member

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  12. Marty McDonald

    Marty McDonald Mortgage broker Business Member

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    I'm not so sure it is in "our" interest to spell these things out Rendom. :eek:

    Call me paranoid but I think APRA found the SS / PC threads and were shocked at the way we had mapped out a way to use lenders in a planned order to maximise a borrowers capacity. Even more shocked when they tested this with live scenarios and found it to be true I'm sure.
     
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  13. Azazel

    Azazel Well-Known Member

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    I agree it's possible to a certain degree Marty.
    Have thought that about the "Lets hype [suburb]" threads, good ammo for the anti-NG people.
     
  14. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    You're not paranoid - it happens.

    I posted something about a lender the other day - got call from BDM within 10 minutes asking how they could help.

    Cheers

    Jamie
     
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  15. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    @Redom how do you see the end of bull market in global bonds playing out for our housing sector?
     
  16. Timkot

    Timkot Active Member

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    Sacked wiggle, there will be ups and downs, so long as your not living on the very edge when some crap goes down. Remember this. Particularly since the GFC we, the world have gone through a massive currency photocopying exercise. All this increase in cash liquidity has had limited impact as most are using it to attempt to repair balance sheets and associated risks. Once we in Australia get through this little recession we are about to have, then the growth of credit availability will be phenominal and will see a boom that dwarfs the one we experienced prior to the GFC. Now if you take the opposite view and we are going to see a great 1920's type depression then in reality for something such as that to occur would result in the vast majority of people on this forum being bankrupted. Not to mention many people in Australia generally let along the rest of the world.
     
  17. Samten

    Samten Well-Known Member

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    Now that's a pleasant thought...not!
     
  18. Waterboy

    Waterboy Well-Known Member

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    That's a strange correlation to make. Although it's a sign of a market nervous of a Fed hike = higher rates in the US = end of RBA rate cuts.
     
  19. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    Not that strange... Bond bull over = credit cost increase which along with serviceability tightening will be double whammy for house price. Now put ageing headwind, increasing unemployment, decreasing salary and reduced migrant intake in equation and we get a perfect storm
     
  20. Redom

    Redom Mortgage Broker Business Plus Member

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    Im not so sure it'll be anything like that @TheSackedWiggle - its generally much easier seeing the bad and not seeing the good.

    From a macro perspective, funds are still very cheap and easily attainable for MOST Australians - the serviceability tightening and APRA changes have made it marginally more expensive and realistically been quite effective in targeting funds away from those with the largest risk sensitivity to rate changes.

    IMO even with a dent to confidence associated from global factors, with funding remaining cheap and available, the housing market will continue to remain strong. Its just so affordable in most markets.

    Also i don't believe because US Fed are raising rates that the RBA will raise rates. It'll be based on domestic conditions, and a falling dollar associated with rates moving in different directions won't worry the RBA (inflation is contained).

    If we had 3-4 rate rises...than yes, i'd see a serious issue and a trigger for the 'perfect storm'. While the domestic rate outlook still looks flat, i don't think anything will be near that bad (in fact, quite good!).

    Cheers,
    Redom
     
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