Australian Housing Crisis: Mortgage Broker Admits His Clients "Don't Know What They're Doing"!!
Australian Housing Crisis
An update to part 5 of the Aussie housing insanity guys.
Today I was contacted by a former colleague who had just had an email exchange with a mortgage broker that he knows in the western Brisbane/Ipswich area.
My colleague had asked his broker mate whether he'd noticed a reduction in demand by investors in response to the tightening of conditions of interest only loans by banks. He didn't answer that but did offer the following gem (and remember, this is coming from an Aussie mortgage broker):
"Most clients I deal with Who purchase investment properties don't know much about what they are doing. Their are a lot of changes coming by the look of it including loan serviceability requirements such as needing to be able to pay off existing credit cards within a certain timeframe such as 2-5 years and also changes to income buffers"
Irregular capitalisation, missing punctuation and spelling errors aside, the drift I'm getting is that he doesn't think his investor customers are all that switched-on. Also interesting is that he is aware that further restrictions are in the pipeline.
For my part, I would only guess that would be the case. He seems to have actually heard some details.
Potentially there will be disappointments for new investors looking to get onto the property escalator, but I think the big crunch will be a future rise in interest rates, as this will catch people already in the game.
I'm thinking that the interest rate rise is more likely to arrive by means of reduced off-shore funds availability and higher cost thereof. I think the Reverse Bank, (yes, I mean reverse!), will be looking to hold down interest rates so as not to crash the economy by hurting the speculation sector.
So I'm not expecting to be able to earn interest in useful amounts anytime soon.
doggy times for property investors -- i am in the boat and hope it doesnt sink
Fingers crossed for you mate but I fear the worst.
What is your projection as to how property prices will develop over the coming 2 years?
Very hard to say @lucky.digger. There's a difference between inevitable and imminent. That said however, personally I'd be very surprised if we don't see some significant unwinding in that time frame given we're already seeing heavy sell-side biases and an inability to sell.
The neighbour over the road from me who I wrote about in a previous "Australian Housing Crisis" post still has his property listed. Off-the-plan has been in strife for a while and we've got some wild demographic forces at play right now with the boomers passing retirement.
Hold on!
Here in Perth, mate, people can't get their high priced flimsy shacks sold either. 800K for rotten wooden beams and a perfect ozon view on to factories with the city in the rear is just a usless investment. I am Buffett tuned up to the end of the meter. The average house in the Perth Hills is not worth more than 350K, they are being sold for double and up... price is what you pay, value is what you get. Many of them the demolishing contractor can pitch up...
Perth is a leading indicator for the rest of #australia as that's where the resources exposure is best seen. I have been hearing similar things from the people I know in Perth and if you think the residential situation is bad, the commercial side is shocking. CBD vacancies are huge there at the moment. Not a good economic sign!
True comments. Well written mate.