Rent dependant investors face rate hike???

Property investors 'materially dependent' on rent face steep rate hike

If correct this may hinder portfolio growth for many investors

 

Arent these advisors to policy reform actually former bankers?
Being well renumerated to effectively look after the sector that funds their wage (sounds like "looking after mates")

The Banks raising rates by 3% for those with a low LVR are only increasing the Banks bottom line !

Now, IF it was like superanuation !
Of the 3% increase that 2.5% went off the principal and the remaining 0.5% went to the bank to cover any possible increase in costs, now that would be fair ish (but not PROFITABLE FOR THE BANK......)

Hmmmmm

 

Probably will be somewhere in the middle. We are already seeing segmentation by banks of owner occupied vs investor loans. No doubt the gap will increase over the coming years.
The RBA and banks know that with the low rates, they have inflated property to dangerous levels.
I love these stories. With 0% LVR on IP's, and only PPOR to get now as rentvestor, the timing will be perfect for around 2019/2020 in Sydney.
Give me B, give me and A, give me a N, give me a K, give me a S. What's that spell. BANKS. Cheer squad here for rate rises

 

Do you really think so?

Then do it now.

ANYONE can increase their payments by 2.5% to increase principal repayments any time they want.

And you don't even need to give another 0.5% to the bank!!!
Marg

 

Isn't it high LVR? For people who have less than 20% deposit?

 

According to the article
"even investor loans with big deposits of more than 40 per cent of the loan may have interest rates rise 1.5 percentage points, while borrowers with LVRs of 60-80 per cent will be 2 percentage points higher"

*time to buy bank shares again maybe

 

Does that seesaw still hold - property down (nee interest rates up), shares up?

 

Or fix your interest rate?

 

It depends, if property very down and defaults very up, then no. Think Govt bailouts.

 

Good point re:defaults.
But with investors choosing where to put their money, if property becomes a "problem" - ie. Sydney and Melbourne turns even more sour with lower CG to match the already low yield - then will shares become the darling (again)?

 

So much for that high LVR and offset account.. out the window with that strategy!

 

If it is just a property slowdown then possibly, if it is a bloodbath, then I would stay well away from bank shares. It is a matter of opinion and the economists usually get it wrong. Let's hope for a soft landing.

If carnage, there will be opportunities from distressed highly geared owners needing to sell to stay afloat, you will just need cash to fund big deposits if banks are running scared. This is often when the rich get richer, wading into the evaporating pond and plucking out the dying fish. They have a full lake in their back yard which they have been filling while the frenzy continued the last few years, here the fish can survive and grow and breed lots of baby fish.

Most important thing is to manage your CFs in the coming years if rates start to rise, with resi, it is not the drop in capital values that can destroy you (as these often pull back years later), it is the CFs. Time to fix may be upon us.

 

I did a hour or so ago . Then I saw the NAB's raising notice today and was glad

 

Have been asking my bank for almost two weeks to provide me with their fixed interest rates for my loans......
Three emails, one reply, still no answer
Tomorrow is their last day before i start "shopping"

 

who is your bank?

 

So much for rent-vesting. The numbers won't stack up in the future.

 

For investors splitting the funding for one property into two via:

• Equity release loan to fund 20% deposit; and
• Separate loan to fund the balance

I presume they won't be amongst those that are affected since the main loan will not exceed 80% LVR. In other words, those already on the ladder with equity prosper, and those not on the ladder struggle to get onto it.

 

Not in Victoria.

 

Those already on the ladder will prosper... Prices will go up with the FHB demand. Housing supply is relatively inelastic short term.
FHB though... they'll be willing to pay more but will be able to get a foothold when stamp duty goes for most purchases.