One in three of new loans are at risk?

Discussion in 'Loans & Mortgage Brokers' started by Roshy, 14th Apr, 2017.

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  1. Roshy

    Roshy Active Member

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    Interesting read:

    Reserve Bank sounds warning about new mortgages

    As an aggregate, borrowers have a buffer of about 17 per cent of outstanding loan balances.

    But around one-third of borrowers have close to no buffer. These tend to be borrowers of low income.

    This is a large % of people not having a sufficient buffer. I didn't realise this and it is making me think we are more susceptible to a correction if prices continue to rise this significantly?

    Thoughts?
     
    Roshy, 14th Apr, 2017
    #1
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Quite normal......... and has recently changed

    Lack of margin and "she'll be right mate" are more normal than not - AND I will add, level of active PAYG or Self employed income should make a difference, but often doesnt.

    ta
    rolf
     
    Rolf Latham, 14th Apr, 2017
    #2
  3. Jaggannath

    Jaggannath Well-Known Member

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    Interesting comments Rolf, I thought the APRA regulations and tightening was intended to prevent this.
     
    Jaggannath, 15th Apr, 2017
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  4. hammer

    hammer Well-Known Member

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    Doesn't matter what regulations the government puts in place. Stupidity wins out every. Single. Time.

    When people are bad with money.....that's it.

    Doesn't matter I they're a cleaner or a surgeon....interest rates are high or low....they will borrow heaps and make the minimum repayments.

    It's the founding business plan for credit cards...

    The issue is behavioral and will provide all of us on here with opportunities at some point.
     
    hammer, 15th Apr, 2017
    #4
    Ted Varrick and Anthony Brew like this.
  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Financial Margin has little to do with APRA in reality, and ASIC ..........on the very outside maybe.

    But then you'd need to also make up and enforce some regs on physical health and fitness, food and lifesyle choices, minimum life and income insurance protection levels, somehow I cant see that happening all that soon.

    Its human, nah it wont happen to me....................

    ta
    olf
     
    Rolf Latham, 15th Apr, 2017
    #5
  6. Ted Varrick

    Ted Varrick Well-Known Member

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    Maybe the RBA should go back and reread their minutes over the last few years, and then have a big, long (catered, probably) meeting about why they are warning about all of these mortgages that might end in tears... and try to figure out how they will deal with it...
     
    Ted Varrick, 16th Apr, 2017
    #6