If you have a mortgage, this is a 60 Minutes you must watch.

Posted this on another thread, worth a read

Down. Down. Prices Are Down. - PropertyInvesting.com

 

Some investors who bought development sites near the peak in Perth also sold at a loss. It's not pretty. Just the reality of buying near the peak.

 

If you like hard data and IO loan switching stories...

Pete Wargent Daily Blog: Share of outstanding IO loans plunges to multi-decade lows

You're spot on.

 

CHART: The size of Sydney's housing investment debt compared to other Australian cities

 

Good stuff @petewargent. I appreciate the link

 

@petewargent Mr.North keeps asking for

'' a discussion on the subject of home prices, and where they may go – for my YouTube Channel? I have had Steve Keen on among others, but so far have not been able to get a coherent point of view around why prices will not fall as far or as fast. I would love to present a balanced set of discussions. I am of course data driven. My genuine wish is to foster open debate, not peddle a specific viewpoint.''

Would you consider taking him on?

 

Hi @petewargent,
I am trying to understand what it means,
Close to a total of 1/2 trillion in IO loans is set to expire by 2021, with each year 120bn of it. Keeping the new IO loan creations aside,
Are you suggesting there is a significant increase in voluntary preemptive IO2PI rollover and is/will be more then 120bn due to expire in 2018?

 

sure would, actually - I'm in London at the moment, but I'd quite like to do a discussion by video when I'm back. A lot of this stuff doesn't translate well to written text, after all.

 

Ouch....

 

Hard to say exactly as the RBA numbers are grossed up and APRA's are netted out, but yeah it does feel like the RBA figures might've been pulled forward a bit by switching.

Mortgage brokers on this site will be the best leading indicator of whether there's any appetite for regulators taking foot off throats, but it doesn't seem to have happened much yet.

Still, it's good that the share of IO loans has fallen so fast, hopefully some common sense will be applied to IO borrowers under stress!

 

Appreciate your response,
With 120bn IO expiry due by 2018 and new IO loans hard to come-by under new credit-environment Percentage of total IO loans due was bound to drop by close to 20%.

It would be interesting to see the refreshed graph of how much IO loans are due to expire year wise.

With bigger chunks set to expire in next two years it will be interesting to see how it pans out.

 

I can cobble it together from Big 4 disclosures & by flexing the RBA totals, might take a while

 

thanks mate

 

What is your view on credit environment being loosed up in next two to three years?

 

no idea! my only recent previous experience was the MMR in Britain, and normal service was resumed quite quickly...but every case is different. At the end of the days banks want & need to lend, so I reckon they'll win through eventually (my view only)...

 

APRA has been proactive then reactive in tackling the IO froth and quite successfully so, at-least so far. The drama is unfolding as per script let see how it continues.

 

Yep,
As Credit tightening has reduced investors buying power by close to 30%, For property green shoot to appear and price to cross its earlier peak (across board) in next 2/3 years in Sydney, the buying power has to be match closer to the earlier buying power and some more or income has to rise significantly, for the boom to continue.

 

Good question. For example, if investor lending is currently set at 6x income then 7x would be a loosening up of credit.

Personally, I am not counting on credit being "loosened" up in the next 2 to 3 years. If anything, credit criteria could tighten further.

As you know, there are options for actual property investors.