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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    I don't login as I use to,
    I got slap on the wrist for one of my post from admin which made me ponder over it and decided to scale back.
     
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  2. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    I believed IO cliff had a potential for forced sale based on the facts of the time, though not significant on its own this along with tight credit would have sustained the downward pressure.
    The reason at the time bulls used to defend IO cliff didn't make much sense to me as in spite of having full employment prices started escalating downwards fast. Tighter credits explain a lack of buyers but not explains spurt of willing sellers who were ready to accept lower prices unless forced to.

    I didn't anticipate RBA/APRA to panic and throw in the towel so fast and reverse the credit restrictions and price. Credit was now cheaper and available to those whom it was not just 9 months ago. The can is pushed further especially for the frothy segments. let's see how this turns out.
     
  3. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    I agree, one often get fooled by randomness without realizing it.
     
  4. MC1

    MC1 Well-Known Member

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    We tried to tell you, but you probably missed in among your thousand posts
     
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  5. Speede

    Speede Well-Known Member

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    These people post none stop ...thinking they know whats up...when things turn other way they usually post once a month or never.

    Probably still waiting for a 80% correction to "jump in"...same old....similar to the other guy seen 10 property cycles still holding a 9-5 job in his 50's waiting to retire in the next 10 years...just like a normal none investor would retire same age.
     
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  6. Redom

    Redom Mortgage Broker Business Plus Member

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    This is largely a funding and credit issue - most won't really know what's in the market and what options exist for borrowers and will likely rely on news articles (sensationalised) to make assessments/judgements. The articles are useful to outline a problem, but they make no reference to what solutions are actually available (if a problem has a relatively simple solution, it's not as big of a problem).

    For now (and for quite a while), at a macro level, this really is a non issue. The rise in non-banks is another major factor - so many funding options exist in the marketplace that are better than the original origination terms borrowers first got (significantly). If a borrower could afford a 5.5% IO rate back in 2014, they can reasonably easily access a ~4.5% IO rate today. Also, given the rapid price movement market wide, there won't be too many selling at a loss now too.
     
  7. sash

    sash Well-Known Member

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    Don't agree about people not selling at a loss in Sydney...quality properties are selling but prices are still down from 2-3 years ago.

    The Big 4 are about to learn harsh lesson if they do not change their ways...the second tier is getting more and more aggressive...yet I still see brokers put clients into the Big 4....
     
  8. BuyersAgent

    BuyersAgent Well-Known Member Business Member

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    Agreed. It was always my view (given my own behaviour in previous cycle) that when push comes to shove you either tighten your belt and make the payments or you sell one (if you have a portfolio). Now that lending is easing up and options appearing rapidly people can access better rates and alternate products elsewhere. There may still be a few people in a stressful situation but that may not be enough to move the whole market.
     
  9. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    Would you buy in Sydney at current valuation?
     
  10. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    Redom,
    Why do you think sydney fell by 15% so fast inspite of all time low unemplyment and economy firing full throttle?

    Though IO2PI may not be an issue due to easy credit availability and easy extentions,
    Immigration is getting restrictive about Sydney,
    Wage rise is negligible,
    Infra boom jobs is tapering
    Jobs loses due to consumer slow down and business banktrupties are getting real
    What do you think will drive Sydney prices further once the expanded credit limit (20%) come close to maxing out?

    Do you think they can remove lowered servicibility buffer all together?

    Also would you buy in Sydney at current valuations as an investment?
     
  11. Redom

    Redom Mortgage Broker Business Plus Member

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    I said IO2P&I was a major issue at the time it was (in Feb 2018). This played a role in a relatively minor housing correction over 2017-2019, insulated largely by a rampant economy & a jobs boom (GDP growth was ~1% per quarter in H12018).

    I also recognised when the issue had passed over time as the deleveraging process occurred throughout this thread & others. By the time you set up this thread, IO2P&I was an issue of the past.

    This is because credit market & property market changes over time though. In this case, the stock of IO loans fell dramatically inside 12-18 months, way faster than I would've predicted. This deleveraging had an impact on the market & the economy in general IMO (although RBA analysis suggests it's not big enough to impact consumption).

    IO2P&I is an issue of the past. Similarly, the housing correction is behind us.
     
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  12. icic

    icic Well-Known Member

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    welcome back @TheSackedWiggle. If you think Sydney is not good value, then just buy somewhere that makes more sense. I am hoping you are here to learn how to make money from RE and not just here to purely to prove a point.
     
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  13. MC1

    MC1 Well-Known Member

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    That's a different discussion. We were talking about your IO to P&I cliff
     
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  14. WattleIdo

    WattleIdo midas touch

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    Down 15% and rising?
    I would buy in some areas, yes.
    Some of the factors you take into consideration are not valid eg lack of immigration will never be a problem in Sydney.
    You need to learn to look around, see what's down in value but still very popular. Stay in the lower price ranges. Don't pretend to be a snob.
    Learn to adjust your analysis with uptodate information and upgrade your thinking.
    Try not to latch onto something someone said months ago and treat it as the gospel truth to be applied in every situation. Things change. If you don't get it, you'd be better off with a managed fund that you can contribute to on a fortnightly basis. Or just put it into super.
     
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  15. inertia

    inertia Well-Known Member

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    yeahbut, how likely is it that the people that bought at peak are the same ones selling at the lower price? Surely the more likely scenario is that those that bought at peak are still holding, and it is people that bought earlier, and still have capital growth are selling? Which would make the reality that people are not selling at a loss, just missed out on some potential gain...

    Cheers,
    Inertia
     
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  16. Harris

    Harris Well-Known Member

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    .[/QUOTE]

    Was just viewing some old threads and boy do we have a few forumites MIA .. Why not follow through all that analysis if the purpose is to enter into a balanced debate - Come back @TheSackedWiggle where-ever you are! :). We miss you...!!
     
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  17. kierank

    kierank Well-Known Member

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    I get the feeling they have been SACKED!!!
     
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  18. sash

    sash Well-Known Member

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    Interest only Cliff not gone yet...time will tell.
     
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  19. Harris

    Harris Well-Known Member

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    That was not my point - I was being agnostic of what IO cliff does or doesn't do... I am just talking about the dozens of members who were incredibly busy posting a dozen times a day on all things doom when resi was in a pickle, but have vanished in thin air..as things have very strongly improved and will keep getting momentum this year and next.

    If you have a point to prosecute, go ahead but its disingenuous to only do that (and try to preach neutrality & objectivity) in select times and disappear.. only to then pop back in when the tide turns!

    I actually didn't mind @TheSackedWiggle commentary. There were a whole host of Keen-Brigade who would post 100 times in a week, come back with another handle and do that all over again.. Each one of them is MIA.
     
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  20. MTR

    MTR Well-Known Member

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    This is a property forum you wont get too many investors wanting to discuss their woes publicly and PC

    Of course its going to impact, how can a 40% increase on mortgages not impact on cashflow, especially for those holding multiple properties

    yes investors can refinance if they can service the debt but bank values also need to come in.
    I guess another option is to sell, this is what my MB has been seeing, clients with large portfolios rationalising debt

    its not the end of the world, but you would be prudent to manage this risk, its not going away
     
    Last edited: 17th Feb, 2020