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It's probably because it's not supposed to be this indefinite buffer. I suppose they've said ok 7.5% is roughly the long term average, so we'll base all our calcs against that...unless it goes over I guess.

Ah I see, so it's unlikely for it to move in lock step with future interest rate increases (unless rates increase and the market still goes crazy).

I assume that this 7.5% is really a 3% buffer? So even if the rates go up by 0.5%, they will move it to 8%? Or will they just leave it at 7.5% until the actual rates hit 7.5%?

Good question, I've never really had to think about what happens with dodgy lenders so I don't really know. I guess things like...increasing your rate from 5% to 15% after 3 years. Or an automatic lock in period after the introductory period (e.g. unless you explicitly opt out, once your term...

Ok thanks. What about dodgy practices / risk? Obviously I'm referring to the smaller players and not the loan sharks. Do they have predatory practices and lots of surprises and catches? Or are they generally ok?

Ah, so this is what shadow banking is. I always thought it was a nice way to refer to loan sharks. So basically it's the smaller lenders? Ok question - other than the higher rates and fees, are they as inherently safe as the larger banks? Would one have to worry about predatory behavior? Do...

This is an important point. For anyone already at the limit, they might be tempted to think - I'll sell one to buy a better performing property (e.g. sell in Syd in 12 months, buy 3 in Bris for same price). Beware - that money may not be available to be "redeployed". In this case you'd rather...

Can be both. But if you already have an application in the pipeline they will honour it. Point being - get moving!

That's scary, about CBA litigation. Which other banks have a reputation to just litigate and repossess?

Ah I see. Thanks

Why 88% specifically? Isn't the tipping point 90 --> 91%?

How's Homeside? (NAB broker or whatever they're called now) In looking to do an IO extension in 2 months.

HA! Hilarious when you think about it like that...

How far does Sydney have to go till it surpasses 2002-2003 peaks inflation adjusted? Or has it already?

Ok thanks Jess. I still plan on pushing as hard as I can on this anyway as who knows, it could get worse! If there's another interest rate drop in Sept or something they may clamp down like crazy.

If I'm looking to extract equity only up to the 80% mark, I should be ok right? I mean all these changes still reduces how much I could have gotten if I had done this a few weeks ago, but it doesn't blow me out of the water does it? The problem is I can't even apply for a new LOC until the...

What?? No way, really...this is just for a few months?! Don't get my hopes up...!

Does this mean they don't allow over 80% even with LMI?

Yeah I've seen this first hand.

I worry this is going to have a big impact. Sure, only a small amount of investors will be affected, but the average 1-2 IP everyday-man will misread this and think they are clamping down on everyone and incorrectly assume this is going to weigh on the market. Expectations, true or not, can have...