Calling all Mortgage Brokers - What's happening on the ground

There has obviuosly been a lot of stuff going on recently in the media etc about the sub prime mess in the US and it's effect on the global credit markets...

The question I have is - is it having any effect on prices and products that the banks are offering through mortgage brokers?

- Are banks/credit facilities pulling back on offering 100%, 105% and no doc loans?
- Are they increasing rates for these types of riskier loans (more so than RBA rate movements)?
- Is there an increase in costs for things like mortgage insurance etc?
- Is more atention being paid to verifying documentation etc?
- Or has there been no change at all

I think it would be good to keep a finger on the pulse of what's happening in the credit markets from a real world perspective.. and mortgage brokers would know the most about this, so if you're willing and able t keep the thread updated with whats happening - that would be cool

Cheers,
TJ

The most notable change has been that one of the mortgage insurers is getting more stringent on ABN checks.

Fixed rates are also on the rise next week. Have a look at my post here

And also one of the mortgage insurers is concerned about "cash out" amounts through some of its traditional nodoc / lodoc lenders.

What is "cash out"?

ThomasAJ said:

What is "cash out"?

Click to expand...

Borrowing the equity out of a property for other uses.

GE have imposed cash-out rules above 85% for full doc & 70% for low doc.
Strangely, LOC products are not effected by these new restriction (subject to individual agreements with the lending body).

PT_Bear said:

The most notable change has been that one of the mortgage insurers is getting more stringent on ABN checks.

Fixed rates are also on the rise next week. Have a look at my post here

Click to expand...

Qlds007 said:

And also one of the mortgage insurers is concerned about "cash out" amounts through some of its traditional nodoc / lodoc lenders.

Click to expand...

You would expect there to be a reasnoable time lag with these events - especially when it comes down to policy changes on writing new loans.... but maybe Aus market will not change that much?

I did notice that RAMS (RHG) today have announced that due to significant increases in their short term funding (via US loans), their profit will be materially effected this year (shares down 24% today)... ouch

One to keep an eye on

TJ

Bluestone raises rates

LOW-DOC lender Bluestone has cited the US mortgage crisis as the reason for its move to hike lending rates by up to 0.8 per cent, predicting the nation's big four banks will have to do the same.

Bluestone is the first local home lender to lay direct blame on the sub-prime meltdown for a sharp increase in its funding costs, and then pass it on to borrowers.

The $3 billion lender told customers yesterday that interest rates on its products would increase in a range of 17-55 basis points, on top of last week's 25 basis-point rise in official rates announced by the Reserve Bank of Australia which would also be passed on. A half per cent rise is 50 basis points.

Click to expand...

http://www.theaustralian.news.com.au/story/0,25197,22240105-643,00.html

Thats a pretty hefty increase (on top of reserve banks rate rise)

TJ

Hiya

in general, biz as usual.

There are some undercurrents of conservative movement as already mentioned on marginal deals.

If you stick with Bank funded products generally there shouldnt be much fall out. Securitised funds may get a bit more expensive ..................

ta
rolf

Rolf Latham said:

Hiya

in general, biz as usual.

There are some undercurrents of conservative movement as already mentioned on marginal deals.

If you stick with Bank funded products generally there shouldnt be much fall out. Securitised funds may get a bit more expensive ..................

ta
rolf

Click to expand...

Thanks Rolf,

I was under the assumption that most of the big four banks also securitise a significant portion of their loans - is that correct? Do you know what % they hold on their books?

TJ

This has already affected me, with one low-doc lender refusing to do an increase of the loan I have with them on one of my IP's. The same lender has another mortgage on another of my IP's and I'm now worried that I won't be able to increase that to borrow equity to pay holding costs etc. Could make things very tight.

TJ

Yes all of the major lenders securitise some of their loans with St George announcing last week that they now have upto 30% of their book in SF's.

They are however an exception with the other 4 running at a lesser percentage.