This Housing Downturn is Over

@petewargent has provided some good analysis on this earlier in this thread. In short, funding costs have dropped a lot for lenders, meaning they are likely to pass it on.

 

The general perspective now is that overseas they cut too late, and by the time they were it was ineffective. But anyhow, rates aside, I don't think anybody here is really saying that rates alone will reverse the market right now...

As per Redom's original post, there are a number of factors, that combined, will may well mark a turning point in the market. Just the fact that we have the "known" government back, with predictable and quite housing favourable party, will reverse much of the uncertainty and fear out there. Housing downturns (or rises) are a factor of many things. I don't think any one factor on its own matters, but take them all and things look a lot better than they did even 2 weeks ago.

 

Nothing to do with the election as i was buying anyway but im super glad my offer was accepted as every agent i have spoke to since have said the phones are ringing and ppl are back on the hunt, this is brisbane but still a good sign of demand.

 

The banks just gouged - simple as that. They initially justified their use of increased IO pricing as a big stick to incentivise people to switch to P&I, but lets be really honest about things.... they haven't been required to meet IO quotas since January and still continue to differentiate on pricing. Sure,the gap isn't as ugly as it was...but they continue using the opportunity to make some extra margin...and what are investors gonna do about it? Nothing . Either they cant ( no servicing ), or they wont ( apathy ).... I think people overlook something very important about Australian consumers/borrowers and their apathy with Banks. Consumers have short memories. But banks don't. See, the banks learned a very important lesson after the GFC and the credit crunch when they started hiking rates out of cycle .... brokers and borrowers flocked to them even though they were gouging , and even though non banks and 2nd tiers and credit unions etc had better deals.... because of a perception of safety of the Big 4 v everyone else .

It was HUGE MISTAKE by brokers and by consumers at the time. YUUUGE. Not only did it cost brokers 40% of their upfront and trail , and set the path for almost losing trail completely 10 years later following the Royal Commission.... but more importantly it set the banks on a path to doing as they pleased, when they pleased - and that has carried over until today . They dont care about political threats. They dont care about the Royal Commission - they gave away a few sacrificial lambs and that was all.... they know they hold all the gold so they make all the rules with regard to what they can charge. And the competition has become so non threatening , allowing them to become more and more emboldened- not because they improved or earned it, but because it was gifted to them by brokers and consumers. 20 years of deregulation and competition was washed away in a year. It was a YUUUGE mistake in hindsight.

The only entities that genuinely scares them are APRA and their shareholders , although I'd argue they often treat shareholders with some serious contempt too They pretty much give the proverbial finger to everyone else - ASIC , RBA, Politicians - and ultimately, consumers

So rates may come down, but dont bet on all of the RBA reductions being passed on. If you truly want lower rates - support the competition. Then the majors will cut rates. They only respect one thing - the bottom line Hurt their volumes and you'll get the lower rates you want

 

Huge mistake??

Tell that to the poor people that had a loan with Rams that was sold to RHG and they didn't have the servicing to refinance and were paying double the average rate.

Please take your dribble elsewhere

 

Mate, you're head is going to fall off from all this flip flopping.

 

If brains were dynamite.... competition is about more than RAMS.

Consumers and brokers had plenty of other choices. Could've written more AMP, more Suncorp, more Adelaide , more Bendigo, more Firstmac, more Resimac, more LaTrobe, more ING, more BOQ, more Citi, more IMB, more Heritage, more Teachers Mutual, more Newcastle, ...etc. Any or all of those would have welcomed the business and it would have placed the majors in a less dominant position for the last decade or so....

By your logic, what do you say to all those poor people who CBA, ANZ, NAB and WBC took for a nice rate ride over the past decade?

That's entirely my point, dynamite ... you want to stop the gouging, its easy- embrace the alternatives. But apathy amongst borrowers remains rusted on, in spite of all the rhetoric. The volumes tell us so.

 

Your know it all rhetoric gets a bit tiring

 

When was this? i thought Rams was owned by westpac? I have a couple loans with rams that are now 3.59% and the majors cant beat it..

 

Mate I have 5 loans with RAMs and no issues...sure their variable rates are little higher...but their P&I fixed rates are pretty sharp now...so are their IO loans.

Too many vested interests who have no idea what they are talking about....too much bluster...and too many people on here ...who rely totally on brokers....they need do some home work also...

I have attached the rates section on the RAMs site..this is to stop the drivel by a certain boisterous individual...frankly...i am sick of their BS...the same ole...same ole...

Our Owner Occupier Home Loan Interest Rates at a Glance| RAMS

 

Actually, he said...

 

That is the very definition of the pot calling the kettle black.

You're jumping in to take a thinly veiled swipe at me - as you love to do - while enthusiastically endorsing/supporting my argument -which, in case you forgot , was that the competition to the majors is actually quite a good option for many , and should be embraced.

Umm... hello.

 

So will pass on some?

 

Hola amigo....

Que...yo no comprendo?

Habla esapanol?

 

Dynamite is referring to the period after the GFC , where the credit crisis caused some lenders to get into trouble. RHG, which traded as RAMS, used to be a real lo doc/no doc lender but in the 2-3 years before floating in 2007, they had gone all in on full doc and in order to get really sharp rates they had all their RMBS on 90 day swaps. So when the credit crisis caused securitisation markets to shut down they couldn't roll over their debt and were forced to sell most of the business and the brand name RAMS to Westpac. The remaining part of the business that wasnt sold was called RHG, and they had to massively hike rates . It didnt last forever because the AOFM stepped in a few months later and provided relief, but it did catch those borrowers out and it was a sHi77y situation.

Macquarie did the same thing to lots of their clients.

Wizard also had trouble- but theirs was terminal. They got their funding from GE , who abandoned every global market to pull money back into the US because they were haemorrhagging money there . Aussie John sold 49% of Aussie to CBA to gobble up Wizards franchises and now they are all Aussie ...

Bankwest , who used to be Bank of Western Australia, got gobbled up by CBA at a steal... because HBOS ( Halifax bank of Scotland) also had GFC troubles and needed to sell assets fast...

STG was almost belly up as well until Westpac gobbled them up.

Many may not know that the deal for ANZ to take over Suncorp was basically done and was only scuttled at the very last minute

In the end though, all the banks hiked rates well outside RBA , and passed on little of the RBA's cuts later on... it was the beginning of the end for the link between RBA cash rate and lender variable rates...

Dynamite is often light on detail... . as you can see it wasnt just RAMS who had GFC trouble. Plenty of well known brand name banks did too... but it was all sorted rather quickly and the AOFM provided cornerstone investment to multiple lenders RMBS issues quickly, so there's no reason whatsoever that brokers and consumers couldnt have used any of numerous other lenders in the 8 or 9 years since , instead of handing 4 major banks over 80% market share ... which is why they can pretty well do as they please with everyone but APRA, nowadays.

 

I think we'd all be pretty surprised if NONE of 50 or 75 bpts was passed on... there might have to be a Royal Commission into banking or something...... oh, wait!

 

That's very very good going. Well played

 

Thanks for the clarity. Yes 2x are at 3.59 due to moving into one first as a PPOR, then 12 months later into the next PPOR, now moving into a 3rd PPOR and getting the same rate.. I’m not sure why they haven’t figured it out I’ve been transparent as!

Might wait a little and see if these rate cuts bring it down even further.. it’s all about timing/moving from one PPOR, fixing, then into the next & fixing.

About 2m all P&I btw, after reading a lot of your posts we have chosen to reduce debt & watching the loans come down in chunks and spit out new deposits within 3yrs is fun to watch.

 

Careful. Listening to me is tiring !

 

It all Greek...I'll drink a Ouzo to that ..

I can't see Sydney and Melbourne making massive upwards movements before Brissie...then Adelaide and then Perth.....