Are credit conditions easing?

[Dazz]

We found it particularly difficult out in the market place Shadow.

Reality................................Credit Response

Undervalued Property............Not Interested
Great Cashflow....................No it's not
10% yield, 7% interest..........We used 9% in our calcs, too slim
3 years left to go on Lease....Lease is too short
We'd like 70% LVR................No
We'd like 65% LVR................Not saying we would, but if we did it would be 50%
We'd like 60% LVR................Full application and DNA swab, then NO.
We'd like 50% LVR................You can't afford it, and we want to see more hurt money
We'd like 30% LVR................Maybe, but income is looking sick
We'd like 10% LVR................Don't waste our time, pay cash
It has a Govt Tenant............So what - go away.
Fed Govt Tenant, big rent.....Go away and get a job, you're too rent reliant


Shopping around at the different Banks - pffft - I'm sure they lunch together every Friday to discuss what went on last week and what they plan to do together next week.


Best of bad bunch at the moment for us was NAB, but I reckon we just found a normal credit person in and amongst all of the squirrels. Their "policy brick walls", which wax and wane with the wind when it suits them, drive me nuts.

 

[Aaron Sice]

aaaaaa amen nnnnnnn

 

[Shadow]

We found it particularly difficult out in the market place Shadow.

Reality................................Credit Response

Undervalued Property............Not Interested
Great Cashflow....................No it's not
10% yield, 7% interest..........We used 9% in our calcs, too slim
3 years left to go on Lease....Lease is too short
We'd like 70% LVR................No
We'd like 65% LVR................Not saying we would, but if we did it would be 50%
We'd like 60% LVR................Full application and DNA swab, then NO.
We'd like 50% LVR................You can't afford it, and we want to see more hurt money
We'd like 30% LVR................Maybe, but income is looking sick
We'd like 10% LVR................Don't waste our time, pay cash
It has a Govt Tenant............So what - go away.
Fed Govt Tenant, big rent.....Go away and get a job, you're too rent reliant

Nicely written.

You're more into development / commercial though, right? I agree things are much tighter in that area than regular residential buy & hold, from what I've heard.

 

[Aaron Sice]

residential buy and hold for personal - thumbs up.

residential buy and hold for investment - thumbs down.

 

[Ausprop]

where ya been BC?

residential/comm build and sell - thumbs down


resi BnD for personal - if you have had a good job for 15 years, have a 50% deposit and can get your mum to go gaurantor

 

[oc1]

residential/comm build and sell - thumbs down


resi BnD for personal - if you have had a good job for 15 years, have a 50% deposit and can get your mum to go gaurantor

Build to sell is working well for me at the moment. How are you applying for these loans? Maybe get out of the retail section of the banks.

 

[Ausprop]

Build to sell is working well for me at the moment. How are you applying for these loans? Maybe get out of the retail section of the banks.

we were actually dealing with the top commercial division of a big 4 bank. unfortunately we weren't big enough to make them change their new lending policies, not many guys are. how big are the sites you are doing? this one we were looking for was a $10m lend... at that level we just big enough to qualify for offshore funding but there was just too much D&G early last year. every time i got a bank interested they'd pick up the phone to a valuer or agent and get a marvin the depresed robot on the end going on about the impending depression

 

[Dazz]

Get A Marvin The Depresed Robot On The End

:d:d Roflmao :d:d

 

[Aaron Sice]

where ya been BC?

bali and another week off.

missed a bill while i was away so telstra shut me down completely.

 

[Shadow]

Non-bank lender launches low-deposit loans

http://www.yourmortgage.com.au/articles/ 4054/default.aspx

Non-bank lender launches low-deposit loans

15/04/2010

Property buyers who are short of the required 10-20% deposit will now have an option with the launch of low-deposit loans in the market.

National Mortgage Company will offer two new mortgage products catering to borrowers who only have 5% deposit. The loans will carry similar interest rates as the banks' standard variable rates and will only be offered as a full-doc loan...

 

[Token Funder]

http://www.yourmortgage.com.au/articles/ 4054/default.aspx

Are we going to see a cut and paste as each Resimac mortgage manager puts an ad out for their 95/5 product?

You understand it's all the same thing, don't you?

 

[Intrinsic_Value]

We found it particularly difficult out in the market place Shadow.

Reality................................Credit Response

Undervalued Property............Not Interested
Great Cashflow....................No it's not
10% yield, 7% interest..........We used 9% in our calcs, too slim
3 years left to go on Lease....Lease is too short
We'd like 70% LVR................No
We'd like 65% LVR................Not saying we would, but if we did it would be 50%
We'd like 60% LVR................Full application and DNA swab, then NO.
We'd like 50% LVR................You can't afford it, and we want to see more hurt money
We'd like 30% LVR................Maybe, but income is looking sick
We'd like 10% LVR................Don't waste our time, pay cash
It has a Govt Tenant............So what - go away.
Fed Govt Tenant, big rent.....Go away and get a job, you're too rent reliant


Shopping around at the different Banks - pffft - I'm sure they lunch together every Friday to discuss what went on last week and what they plan to do together next week.


Best of bad bunch at the moment for us was NAB, but I reckon we just found a normal credit person in and amongst all of the squirrels. Their "policy brick walls", which wax and wane with the wind when it suits them, drive me nuts.

Dazz i think this is because of your heavy exposure to commercial property.

I am finding things pretty much 'normal'.
I have just been invited to join a 'big 4' private banking section (whatever this means). They are comming to me, not the reverse.
They want my business,
revaluation of properties to 80% with a borrowing facility, yeah sure no problem.
Margin loan that has to beat my current rate (which is apparently very low), yeah sure no problem.

Establishing an overseas funded debt facility (ie borrowing in overseas currencies), yeah sure not problem.

Only condition is that i have to qualify as a 'sophisticated investor' (the whole banking industry has learned from the storm financial blowup).

 

[Intrinsic_Value]

residential buy and hold for personal - thumbs up.

residential buy and hold for investment - thumbs down.

i would qualify this by adding, residential contruction with a view to buy and hold, thumbs down.

 

[Shadow]

Are we going to see a cut and paste as each Resimac mortgage manager puts an ad out for their 95/5 product?

You understand it's all the same thing, don't you?

Sorry if all this talk of credit easing bothers you.

You can always post examples of credit tightening here as well if you wish.

Haven't you been saying that credit would be tightening significantly in the future?

So you've probably got lots of examples you can post by now...

 

[boz]

Sorry if all this talk of credit easing bothers you.

You can always post examples of credit tightening here as well if you wish.

Haven't you been saying that credit would be tightening significantly in the future?

So you've probably got lots of examples you can post by now...

Shadow,
every RBA rate rise is a big step in credit tightening.
The string it is always the same and if you have financial company easing credit you'll end up with a higher rates from RBA.
The ultimate goal of RBA is to have a long term sustainable increase of credit market. I think RBA is aware that if credit contract they'll lose control over it (and over the economy and the AU$)

 

[Shadow]

Shadow,
every RBA rate rise is a big step in credit tightening.

Well, rate rises make credit more expensive, but not less available.

 

[Dazz]

Dazz i think this is because of your heavy exposure to commercial property.

Nah, couldn't be, we've got less than 500m in that sector, must be some other factor.

I have just been invited to join a 'big 4' private banking section (whatever this means)

Fear not IV, it doesn't mean jack squat. We got shunted through there 7 years ago and all it means is that you've outgrown one fishpond and they've dumped you out of the normal "relationship manager" who has about 500 to 600 clients to look after, and you've been upgraded to a "private banker" fishpond who has between 80 and 90 to look after. Admittedly, slightly more personal service, but nothing extraordinary. You will be bombarded with all of their 'special deals'.

If you keep your head down, bum up, in a couple of more years time they'll scoop you out of that pond and chuck you into "institutional banking" where you will be one of about 15 or 20. That's when you get upgraded from Granita or Milk Arrowroots with your cuppa, to perhaps a Kingston Cream. Fear not, the Tim Tam's are still off limits.

But what does it all mean IV ?? It means absolutely nothing IV. They've still all got absolutely no decision making powers at all. They still all package your paperwork off into a nice neat bundle for the credit squirrels in their dark silent room to pour over. You still won't be able to negotiate with them, and a rejection from your Private Banker on a nice thick custom paper with the silver livery is just the same as one received on the bog standard A4 black and white version.

 

[Token Funder]

Sorry if all this talk of credit easing bothers you.

You can always post examples of credit tightening here as well if you wish.

Haven't you been saying that credit would be tightening significantly in the future?

So you've probably got lots of examples you can post by now...

(a) Talk is cheap. As I said before:

Finance is a problem for a lot of people.

Not that getting finance itself is the problem....just getting it on the terms they are used to or think they are entitled to.

I said here or elsewhere a long time ago that credit-tightening is a subtle thing. Everyone expects "marginal borrowers" to find it difficult, but, of course, they tend to think everyone else is a marginal borrower.

It will continue for some time ,slice by slice(I for one, expect to the see the policy distinction between OOs and investors becoming more marked and, potentially, life being made more difficult for brokers by the majors). There will be the odd headline around increasing LVRs or whatever out of some lenders etc which will get the usual suspects excited about a return to the pre-2007 days, but closer inspection will reveal conditions, credit scoring requirements and various other bits and pieces that will show it is very different version of whatever used to be the case.

We're not in Kansas anymore, Toto.

Credit rules are not going back to the pre-2007 environment any time soon.

(b) Read the forum, it's all there if you're prepared to let reality intrude.
(c) In 2008 I said credit would tighten and bank's cost of funding marings would need to increase. Are you disputing the accuracy of either of those assertions? I note that Rolf (obviously his knowledge is inferior to your own, what with your closeness to the market) answered your question fairly succintly already:

no

while some full doc lvrs are a little better here and there than 6 mths ago, overall the outlook is poor.

Add to that the new legislation that will make it hard for anyone to lend money to someone unless u can categorically verify their income and to some extent their outgoings today and make some guesses about their future

ta

rolf

Here's some further comments today fromthe CEOs of Smartline asnd Aussie who clearly remain misinformed. I'm sure they'd appreciate a call from you to put them right. I have their mobile numbers if you want to PM me.

You may also wish to give them some reassurances around both the impact of the forthcoming NCCP Act and the liquidity rules under Basel that the ABA are nervous about.

 

[Shadow]

In 2008 I said credit would tighten and bank's cost of funding marings would need to increase. Are you disputing the accuracy of either of those assertions?

I believe you also suggested that credit would keep on tightening, enough to prevent house prices from rising?

 

[Token Funder]

I believe you also suggested that credit would keep on tightening, enough to prevent house prices from rising?

I said and continue to say that credit restrictions aren't good for house prices. I would have thought even you would understand that: money became harder to get in 2008 and we saw the largest national fall in median prices since Jesus played full forward for Jerusalem. In 2009 Ruddy fills the deposit gap, we have the cheapest money in a couple of lifetimes and prices go up.

If you can't get the answer you want to the question you asked, man up and start a new thread.