Struggling borrowers will need to consider selling: ANZ

https://www.smh.com.au/business/ban...-to-consider-selling-anz-20200710-p55awv.html

One of ANZ Bank's most senior bankers says some borrowers who are unable to meet their mortgage payments will need to consider selling their properties in the coming months, warning it would not make sense to continue accruing interest.

Any propertychat investors needing/planning to sell?

Is capitalising interest when prices and rents are falling a good idea?

 

Without being shot down....

It is about time we saw something like this, it’s a simple concept, if you can’t afford to hold something sell it, if that means selling at a loss well hell thats the risks with investing.
Will this cause a decline in prices? Probably.

 

This has always been the case. If you are struggling to pay a loan you should consider selling to avoid having the mortgagee do it for you

 

Cue the violin.

 

Pretty standard, common sense

 

Who'd have thought!

If this is the advice ANZ's "most senior bankers" can come up with, they need to step the f down.

 

I expect there will be much more of this sort of comment from banking and other circles as a way of prepping many younger investors who have not experienced a market correction that things can go backwards and they have to accept the risk of losing money - the government will try to ease the pain but won't be lender of last resort.

 

Disagree

I think Australia has had it too good for too long with policies in place to make investing in property as risk free as possible. I think many would be surprised with this stance from ANZ and the whole country needs reminding that property isn't a free ride

 

If someone is struggling with making repayments/cannot make repayments on their loans then selling the property is the next logical step, regardless of the Covid-19 situation. There has never been a policy that allows someone to stop making repayments AND hold their property until now and it was always meant to be a temporary measure. If you remain unemployed or unable to service the debt after the 6 months + extended period then of course it makes sense to sell - I don't understand how anyone i that position would think otherwise?

 

Probably going to see more of this banks may well flood the media with doom and gloom with goal of getting more handouts for borrowers

 

Its not just specific to investors though.
And it isn’t specific to LVR’s either so I think that’s a bit harsh (by that I mean your comment it’s about time we saw something like this).

Some industries have just been annihilated. Heck a pilot with a LVR of 30% could be forced into selling a property. That’s the cold hard reality of this situation.

Don’t get me wrong I agree stupid over leveraged investors with bad principles will cop a massive wake up call in stupidity. I do feel for the forced sales of others though and like I said pilots who I consider to be one of the most respected professions are now unemployed with no end in sight.

 

It is if you are an American bank.

 

Perhaps banks are loving the deferrals as it allows them to continue increasing their loan books by capitalising the interest - their share prices have rebounded strongly to reflect this.

Govt is pretty much guaranteeing their repayments via elevated jobseeker/jobkeeper which is expected to continue probably forever. Also they passed bail in laws to allow them access to your precious deposits/offsets/redraws if they go broke.

Too big to fail indeed. I would start to panic if their shares take dive under the march lows though.

 

I’m sorry I will respectfully disagree.
Regardless your profession you should have a buffer for any event, yes even one where your profession becomes extinct.
Unreasonable you say - I have an LVR Much much higher than 30%, also have years worth of minimum repayments sitting in an offset. How? Easy, in my 30s and I’ve never been overseas, only buy what I need, couldn’t give a f what the bloke next door has, always use hand me down phones, pre paid sim cards (free plug to Aldi), worked 3 jobs through my whole apprenticeship, have never bought a new car, work 7 days (circa 60hrs a week) etc etc..
What if my profession become obsolete or deemed non essential? Simple, I would do ABSOLUTELY anything to keep the lights on, if that means I’m a neurosurgeon one day and stacking shelves the next so be it. I’ve seen many middle age, well spoken and well educated Individuals at my local Woolworths lately that have only been there since this Covid episode, one that I even know personally, he lost his job as an electronic engineer, he’s exact words “I’ve got bills and two kids at home so here I am”. I liked this guy before, I love him now.
Moto of the story, prudent planning means just that, live within your means, plan for the worst and hope for the best. (Even plan for being injured and not be able to work for years). So for your example, a pilot, that as you said great profession, would no doubt have earned good money prior to this, this means they should have a cash buffer of at least a few years. In that time either things will change, they’ll find new work doIng something else or they will have to downgrade their lifestyle.
Again sorry for the rant, this Is definitely not an attack at you (love reading your posts/view on things) but I’m sick to death of the victim mentality, regardless your profession, if you are able to work and whiling to work, you WILL find work, might not be a respected position but hell as I said I’ve got more respect for people doing what ever it takes than for those who were in high paying jobs living like rockstars Now crying victim.

 

I’m going to have to report this post for common sense, we can’t have that in a perma bull, entitlement section of a property forum.

 

@Silverson I know the point your trying to make and agree that everyone where possible should have the proper protections in place.

In this situation though I just don’t think the “about time” applies because a lot of people have done the right thing. They have saved, paid down debt got a great education but that’s all about to count for nothing.

And yeah it’s easy to say “just get another job stacking shelves” but sometimes it’s not that simple. Even very diligent people adjust their lifestyles to their earning capacity. And that doesn’t mean discretionary spending that may mean sending their kids to good private schools (and why wouldn’t you).

And again I understand it’s easy to sit on the sidelines and say well they can do this and do that and make ends meat and they can and not sell, and a lot will. BUT I just don’t think it’s fair on these people to be grouped into the “about time” bucket is all I’m saying.

About time stupid idiots who buy OTP apartments because property doubles every 7 years cop a right whack is fair.

 

I disagree with the "you WILL find work" statement. The history of recessions demonstrate older people, people with a disability or certain groups within society, may never work again and that is nothing to do with their work ethic or their reluctance to accept work.

When I have applied for mortgages in the last 12-18 months, I'm astounded by what I am allowed to borrow but just because I can, doesn't mean I should. I haven't because the maximum borrowed sum doesn't fit the backup financial plan I have that allows me to sleep at night for a significant period. Sadly, too many cheerleaders have encouraged irresponsible borrowing and when the chickens come home to roost and borrowers are having sleepless nights, those same cheerleaders will not be found.

 

Thank God - some common sense. This false economy can not last the way it is going. Property investment is a risk - at this point in time the risk may not have paid off for some people. People living week to week with numerous investment properties must except they may have to sell off a few if they have lost there job, pandemic or no pandemic.