Negative equity starts to bite

It will be interesting to see if any recommendations are made regarding IO loans when the RC hands down its interim and final reports.

 

That's not factually correct. I have IO loans from 2014 that are P&I. Not all IO loans from 2014 will reset to P&I in 2019. There are 5 possibilities that I can see:
1) the IO loan will be extended for another IO period (subject to serviceability)
2) the IO loan will be refinanced to a 30 year P&I (subject to serviceability)
3) the IO loan will revert to P&I in 2019
4) the IO loan has already been converted to P&I (I have 2 of these)
5) the property has been sold and the IO loan paid down

You can't just say that all IO loans from 2014 will revert to P&I in 2019.

 

it is not about purchase year, it is about a year when an investor/OO refinanced... increasing their loan. It can be considered as purchase.

why to discuss it if, for example, RBA clearly said that 1/3 of all OO have <1month cash buffer, and 20% have 1-6month buffer?

 

I agree and not all loans will fall of the cliff in 2019

The IO were taken out in2010 2011 2012 2013 2014 2015

I agree its an issue.


But similar to Baby boomers not all are going to retire the same year. Its a process.

 

Yep, a steady stream of squeezed investors who are forced into selling and keeping the market tilted in favour of buyers for years to come. Which maybe suggests a gradual and prolonged market decline over many years as opposed to a quick crash. I'd personally prefer the latter. Ripping the band aid off quickly vs slowly I guess; the sooner a recovery can start the better.

 

Investors who purchased prioperty over 20+ years10+ years 5+ years are not going to give a poo.

The part of investors who purchased from 14-17 might or might be in a position where its not relevant.

 

Well, I don't follow property and interest rates so my guess it will either happen or it won't. You will know it has happened when you read article after article from various punters claiming it's all the banks fault, they shoudna gave me all this money, we didn't know we had to pay the money back, we were only trying to save for our retirement and what the hell is P&I?

 

Principal and interest, as opposed to IO, interest only

 

Ta.

Note to self: Use quotation marks where appropriate.

 

Not too sure if this is genuinely trying to help “poor” old @SatayKing understand the beast that is the finance machine or joining in on the sarcastic fun, either way hilarious.
BTW does anyone know if there is a universal symbol for sarcasm when typing in sans script?

 

''''

 

Italics is commonly used