What will stop the BOOM in Sydney and Melbourne

That's right

 

So, in this case, shall we all fixed out loans to Fixed Interest Only loan of minimum 5 years ?

 

According to a post on Zero Hedge, the Vancouver boom or bubble has reinflated.

(OK, Zero Hedge has a particular political bent, so it might not be an entirely accurate source...)

Ignoring that piece for a minute, markets appear to be slowing in Vancouver, London, Sydney and Melbourne, all of which depend on inflows of foreign money. It's possible that there's a global trend going on, or it could just be coincidence.

 

Interesting figures relating to interstate migration,
looks like Sydney is losing residents and Gold Coast, Brisbane & parts of Melb are gaining…

But it doesn't show how much Sydney's population for example grows because of overseas migration...

It Looks As If Sea Change and Tree Change Is Gathering Pace

 

Useful article. Was interesting to see some regions of Perth on the top 25 list. Confusing to then see them on the bottom 25 list ...?

 

Not going well in Toronto The big blow — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate

 

According to Digital Finance Analytics, 128,230 Sydney households are in mortgage stress, so it's likely these people (who is with IO loan) won't be able to refinance when their agreement is expired or to manage higher repayments when interest rate goes up.

14,321 of them are already in severe stress ("are often forced to sell", "are unable to meet repayments from current income").

In total (Australia), Mar-->Apr-->May stats:
669,000 --> 767,000 --> 794,000

 

RBA knows

"ONE-THIRD of Australian home loan borrowers risk defaulting on their mortgages because they don’t have enough of a savings buffer.

The Reserve Bank has warned many homeowners have buffers of less than one month’s repayment, putting them at increased risk if interest rates rise or wages fall."

 

Gives me another chance to C+P one of my favourite quotes

Zero Hedge is a ******* insane Austrian school finance blog run by two pseudonymous founders who post articles under the name "Tyler Durden," after the character from Fight Club. It's essentially apocalypse porn. It has accurately predicted 200 of the last 2 recessions.

Zero Hedge - RationalWiki

 

Is that IO investors or does it include P&I borrowers? If the claim that IO is our sub-prime is going to be substantiated then we would need to find out the composition of the one third of homeowners. Maybe that figure is predominantly first home buyers, in which case first home buyers are Australia's sub-prime.

 

According to Michael Pascoe- sydney prices will not drop...

Sydney householders sitting very tight – we don’t want to sell

 

They will sell very quickly when the economy starts to suffer and jobs are lost because nobody has any money to spend, consuming things they don't need and paying for it with money they dont have because everyone is paying off a giant mortgage, they should never have been given, but were given, because the cheap credit finance industry gave politicians brown paper bags full of money to perform economic terrorism on its citizens and for state goverments to cover over 20 years of economic ineptitude and mismanagement and lack of foresight by appearing profitable from selling all assets and raising stamp duty. Even now they brown paper bags are flowing freely because the developers need to sell their rubbish apartments which nobody was buying and so they have waived stamp duty in nsw so that young people buy garbage apartments in Sydney or leave Sydney for the regions and buy there, creating space for more Chinese migrants. It's a game played on the Australian people because they refuse to be educated. Everyone young in Australia is to be mortgaged to the eyeballs and working hard to pay the finance industry loads of interest. Women may as well cut their ovaries out because they can't afford to have a family and guys may as well use their bells to play ping pong with, but this suits the goverments here, they won't have to build so many schools.

 

RBA mentioned only this:
that third is "...most commonly households with newer mortgages and those with lower incomes and wealth."

Taking into account that the share of IO loans increased recently, we can expect that many IO holders have small cash buffer.

 

Arent io loans assessed on p&i serviceability?

 

That's always been my understanding. If not would love to hear from anyone that has been granted a loan non p&I accessed.

 

So banks have assessed that the io borrowers can afford p&i, probably with higher interest rates. Just because borrowers choose to pay io doesnt mean they cant pay p&i.

 

It's not a secret that many applicants hide some expenses in order to get an approval. It's not a secret that some applicants intentionally lodge Tax Return with higher income than they actually have (to improve serviceability). And many more tricks...

Plus APRA only recently asked banks to assess future repayments considering the interest rate is 7%.

Finally, expenses almost always tend to grow faster than income (more children, health problems related to age, higher prices, etc).

 

So we're doomed, I guess. Oh well. Maybe if everyone paid more tax the budget would look healthier?

 

miners, google, facebook?.. funny!

 

Well, if there's widespread lyin' on loans, then....... I need that bunker.