IO2PI rollover updates

Discussion in 'Property Market Economics' started by TheSackedWiggle, 6th Feb, 2019.

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  1. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    you can take a selfie whilst self punching
    you can then post as described below
    How to add an image to a post
     
  2. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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  3. MC1

    MC1 Well-Known Member

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    Can you make one for me of a wiggle, a large stick and a dead horse. Cheers pal
     
  4. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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  5. mickyyyy

    mickyyyy Well-Known Member

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    Thank you for that, I was in a rush and made sense in my mind :)

    Yes they are unable to refinance due to borrowing calculator saying they cannot borrow what they already have in debt.

    I saw my borrowing capacity drop BIG TIME the last four years and income go up and cant get the funds been offered back then from that provider...

    Economy is already being impacted, ive been wanting to buy a particular car and dont want to buy new as it will be kept outside, seen 4 sales last 6 months due to change of circumstance and these cars are less than 1 years old, new car sales way down, my mates mechanical shop doing big dollar repairs were customer 12 months ago would say ill buy a new car. They are now holding onto cash and fixing what they have to get by. I can keep on going but you will get the point.
     
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  6. mickyyyy

    mickyyyy Well-Known Member

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    Yes and apologies I was in a rush when posting that, made sense to me at the time :)

    Yes they are unable to refinance due to borrowing calculator saying they cannot borrow what they already have in debt, in your words "cannot pass a servicing calculator"

    I saw my borrowing capacity drop BIG TIME the last four years and income go up and cant get the funds been offered back then from that provider...
     
  7. Redom

    Redom Finance Strategist Business Member

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    In general, i think there may be a lack of understanding about the actual options that borrowers have here. Media have no idea. This is a funding question.

    In general, if you're situation HAS not changed from when you originally obtained the loan, that is, no increases in income & no changes in expenses, than for the vast majority of borrowers, at the very least:

    - You will be able to extend your interest only term with non-bank funders who have better calculators. These lenders are likely to have BETTER terms than what you originally got 5 years ago.

    So...we are in a situation where:
    - The stock of IO loans is now approaching the new IO written rate. I.e. the stock of IO loans will barely change going forward for the short-medium term.
    - The vast majority of IO loans that do expire, borrowers have funding options available
    - The funding options that are available are getting wider, cheaper and more competition is opening up in this space...increasingly so in 2019.
    - Arrears rates are going nowhere (economy dependent)

    You are correct in saying that:
    - Some borrowers will treat this as a trigger point to sell. Thats true. They may have options but will prefer to sell (not forced). Nonetheless, new listing data shows a 20%+ (and rising) fall in new stock. I.e. there are significantly fewer borrowers selling their home today than one year ago.

    The idea that this will lead to mass scale forced selling from this alone is false. You could have a situation where the economy begins to falter (largely because of falling consumption, partly attributed to higher repayments/falling prices), that triggers some forced selling. But the RBA will nip this in the bud if they need to.

    So far, the massive shock in IO lending is a big part of the story as to why prices fell. 15% of all mortgages have swapped from IO to P&I, inside 12-18 months. Thats a big consumption impact and in my opinion, has played a role in fall in prices so far.
     
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  8. mickyyyy

    mickyyyy Well-Known Member

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    @Redom agreed most of these people can go to non-bank lenders but im sure my friend's organisation has access to them also like resimac & firstmac, i'll confirm and revert back as if those 45% dont service with them either then massive issues ahead...
     
    Last edited: 20th Feb, 2019
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  9. berten

    berten Well-Known Member

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    You sound a bit worked up.

    Irresponsible lending has been well documented. It’s not debatable. Some people can’t afford the rollover and were planning to refinance or sell for CG. That is just a fact.

    I did not say 45% of people FYI.
     
  10. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    If majority was just preemptive switches(still holding) and not much in forced sale why the fall in price so fast so much?
     
    Last edited: 20th Feb, 2019
  11. euro73

    euro73 Well-Known Member Business Member

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    Those aren’t the non banks @Redom is referring to. It will be lenders like bluestone, pepper and liberty for the most part. Firstmac and resimac don’t have old school calcs anymore . They are a little sharper than most, but they are still quite APRAfied , so to speak .
     
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  12. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    not alone but it can be one of the headwinds acting in parallel to other headwinds. it will play a role and may not be as insignificant as implied.

    Let see how OTC settlements play out this year and next and the effect of it on valuers and insurances.
     
  13. berten

    berten Well-Known Member

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    First hand account of reduced capacity? FAKE NEWS! :p
     
    Last edited: 20th Feb, 2019
  14. Redom

    Redom Finance Strategist Business Member

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    I'm not exactly sure about the market as a whole, there's so many factors at play when you go this macro. I also commented that i do believe it has had a relatively big market impact already. I've clarified why i believe that this market impact has already been felt throughout this thread.

    In the above post, i was simply clarifying clear misunderstandings about what the real funding options are for borrowers. Overall, not too many would be 'trapped' with no legitimate funding options. No doubting drops in capacities (done many threads attempting to quantifying this), lending changes, etc.

    The biggest fear associated with resets is associated with a corresponding supply increase from forced sales. At a macro level, the resets have already happened & listing figures have dropped. Mass forced sales hasn't and won't happen...assuming the economy continues to perform relatively healthily (?).

    @mickyyyy & @euro73 - yes i classify both those lenders as middle tier lenders, slightly better than everyone else but no where near as aggressive as the others. The others are about to come out with a wave of international funding too, increasing competitiveness and offers to borrowers over time.
     
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  15. MC1

    MC1 Well-Known Member

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    Not worked up. I just don't buy into the BS like many others

    FYI 45% was in original post

    Irresponsible lending is well documented and fact and can't be debated you say. I strongly disagree, but then again, I don't rely on A current affair or News.com
     
  16. MC1

    MC1 Well-Known Member

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    We have all got reduced capacity to borrow now. That is not rocket science.
    But IO to P&I and banks lending on the proviso that you would refinance by the end of the term is comedy gold
     
  17. mickyyyy

    mickyyyy Well-Known Member

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    Hahaha :) I've documented it thoroughly as I found it strange as it slowly disappeared over 4 years and my income has gone up by a considerable amount, and I can only get 30% of what was offered back then from that provider (Big four)
     
  18. berten

    berten Well-Known Member

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    Sorry, my post was intended as spruiker satire. I have no doubt it's true your lending capacity has dropped massively.
     
  19. MC1

    MC1 Well-Known Member

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    Mickyyy, your posts are starting to get a little ridiculous
     
  20. MC1

    MC1 Well-Known Member

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    You have no doubt its true that his borrowing capacity has reduced 70% in 4 years with a higher income ......... ok then