Safe as houses no more as banks fear spike in bad loans

https://www.theage.com.au/business/...-fear-spike-in-bad-loans-20200715-p55cd8.html

 

Can you point out any notable data from the article because majority of what I read was just fluff.

 

Agree, mostly fluff, but anyone who thinks they can pause their loans indefinately, is kidding themselves.

 

I don’t know, I expect to see 12 months and beyond of deferrals and even longer for some. It will depend how many people are under water, if it’s a lot, it’s more likely.

 

Aussie banks brace for wave of mortgage defaults - MacroBusiness

"The data is downright ugly.

According to APRA, $192 billion worth of mortgages have been deferred by Australia’s lenders, comprising 11% of total housing loans:"

"Moreover, more than one-third of investor mortgages have had their repayments deferred, a significant share of which are interest-only:"

Are these stats accurate?

If so it's about to get real ugly!

 

Banks were/are handing out deferrals like candy.
There is zero evidence checking being undertaken and why would they. It’s an administrative nightmare and ultimately they are making money from it.

I know countless people that deferred home loan repayments because the banks actually offered it to them and they thought “why not, better just Incase”. These people have been unaffected by CV, heck some are in a way better financial position.

You then also have deferred HLs after people have gone back to FT or where applicable found work.

I would be curious to know the real number. I would guess it’s 1/4 or less than the reported number.

 

Just shows the attitude or the average punter doesn’t it , defer now and think about it later.

 

Interesting, I was not offered deferral by my bank, although they automatically adjusted to the minimum repayments on all my loans when COVID hit. I was not under any stress, in fact my income has increased substantially under COVID.

 

Same here, which I find to be very poor form. If you've set your repayments higher, you KNOW you can reduce if you need to. It's as if they want you to take longer to pay off your properties, so they can make more money out of you..........What?

 

I know, I get the sneaking suspicion there not looking after my best intrest.

 

The mortgage deferrals have really muddied the waters of the stats. Usually we would be able to judge the health of the market on delinquency rates but with the mortgage deferrals these delinquency rates will underestimate the actual levels as anybody who thought they may have issues with their mortgage would have requested for a deferral.

https://www.smh.com.au/politics/fed...kets-but-businesses-wary-20200211-p53zox.html

"Figures from the Australian Bureau of Statistics show the average mortgage on an existing dwelling in NSW grew by $112,600 or 22.2 per cent through 2019 to hit an all-time high of $621,500".



Wage growth has been <3% each year since 2013. Prior to the 2019 election Australia's economy was in a recession on a per capita basis. I think the market will be stagnant as long as there isn't a shock e.g. interest rates rising due to inflationary pressures.

 

As much as I am not trying to justify that decision you would be surprised how many people are oblivious to their financials and are unaware they are paying extra or have an advance.

I work at a financial institution (that did not automatically reduce payments) and a very large percentage of people called to apply for a deferral without being aware they had multiple months if not years of advance that could be used for their loan repayments as well as people that didn't know they were paying more than required due to interest rate drops.

Everyone here is by far in the minority by being so aware of their financial situation as well as just being financially literate in general and because money is not talked about by people who aren't financially literate sometimes you can be oblivious to just how many people out there don't really know what is happening with their money

 

OK, that is a sound point, BUT, maybe it would have been more prudent to send a note to customers and ASK if they would like a reduction, than to just go ahead & do it. It was a real inconvenience to me, as I have many loans, so checking which ones had been adjusted, and re-adjusting them, with those that hadn't.

 

Yeah I agree, you wouldn't think it would be overly difficult to send a notification on internet banking or something to simply ask the question or have a pop-up to direct people to where they can change their monthly repayments. Unfortunately I think a lot of people would have loved the fact this happened and be unaware of how much more interest they will pay in the long run.

 

Big 4 brought all payments to Minimum .
Their was no choice.
I happened about 4-6 weeks ago. I was notified and than 2 week later it happen.

I than had to log in and up my repayments to where they were.

This was the case with many i know.


PS my bank didn't offer me any deferrals .( I didn't ask )

 

Same! I think some will get themselves into trouble with the deferrals, and not realise that the banks really aren't doing any favours. It's fine if you know your income is limited temporarily, and this helps you to hold on, but for those could have just tightened their belts, to get by, and are basically just got their heads stuck in the sand.

 

You have to go back to the start of the crisis and cut them some slack....there was turmoil in the rental market and the huge lines snaked outside Centrelink paid testament to the potential crisis looming with unemployment.

Imagine if everyone rung up or wrote in querying or asking for deferrals, the banking response system would fail as happened in the early days with Centrelink and Jobseeker. The blanket deferral approach bought time and probably eased the financial stress on many!

 

Let me further break this down.

Some lenders actively sent emails to customers advising them they could defer payments. I know this because my brother asked me about “this email I got”.

Some lenders AUTOMATICALLY deferred payments on some loan types. I know this because my CBA car loan got deferred for 6 months without a say. I needed to call them and say thanks but no thanks.

I’ll tread carefully on this one but some “advisors” have recommended to clients to defer payments and use the money to instead invest in the share market for better returns. Not the worst advice either TBH.

Shall we go on...

 

And their is no recourse for this. Banks are loving it.

Let’s not get started on how many FHB have also fast tracked 20k-40k deposits thanks to super access. With this one though, there may be some recourse when ATO get some breathing space in oh 5 years time.