Are credit conditions easing?

[Marty McDonald]

Belbo not saying what you are saying is wrong but as an ancedotal to counter your comments my brother in law is a high end reno builder on the north shore of Sydney who also owns a half share in a landscaping business that services very high end clients. Average reno contract is around $800k and a couple hundred k landscaping job is not uncommon. He is having a very good time of it at the moment much better than 2009 and 2010. I can tell from his line of credit balance!!

So perhaps it's not that bad

 

[Belbo]

Belbo not saying what you are saying is wrong but as an ancedotal to counter your comments my brother in law is a high end reno builder on the north shore of Sydney who also owns a half share in a landscaping business that services very high end clients. Average reno contract is around $800k and a couple hundred k landscaping job is not uncommon. He is having a very good time of it at the moment much better than 2009 and 2010. I can tell from his line of credit balance!!

So perhaps it's not that bad

Good on him indeed. A seriously distinguished operator of solid repute at such a level. But how he's finding such work is hard to fathom.

I could be cynical and suggest it's pre-selling cosmetics, but the dollars are probably too big for that.

More likely he's just damned good at his trade and has locked into the cream seam. It's always there, of course, but it's very, very exclusive.

We've found one ourselves (high-end fashion boutiques that are not only immune to - but have actually prospered vigorously throughout - the GFC), but while profitable, the pace required is absolutely brutal.

I'm not saying survival is impossible, but it has come down to survival only of the fittest.

 

[Graemsay]

The Wall Street Journal had a blog post talking about Australian banks trying to sell mortgage backed securities to the American banks.

http://blogs.wsj.com/marketbeat/201...rs-buy-australias-mortgage-story/?mod=WSJBlog

 

[brucealmighty]

Dangerous Game they are Playing!

Yes, it is becoming increasingly hard to get finance now days.

They say Australia's lending criteria has left us in good shape moving forward from the GFC. However, if that is the case, then why not just borrow as per/normal criteria and continue allowing legitimate, earning Australians to borrow money.

The dangerous game they play, means no money being borrowed and no profit growth for the banks. They should practise what they preach, and if we are in good shape like the suggest then keep borrowing!

BA

 

[josko]

Accodring to http://www.news.com.au/money/banking/banks-back-to-risky-lending/story-e6frfmcr-1226140008162



So is credit loosening or tightening?

I also have seen a few more articles on non-bank lenders re-entering the market now.

Hey prop, your link disappears, can you post or PM the articles to me, please?

Cheers JO

 

[Aaron_C]

Yes, it is becoming increasingly hard to get finance now days.

They say Australia's lending criteria has left us in good shape moving forward from the GFC. However, if that is the case, then why not just borrow as per/normal criteria and continue allowing legitimate, earning Australians to borrow money.

The dangerous game they play, means no money being borrowed and no profit growth for the banks. They should practise what they preach, and if we are in good shape like the suggest then keep borrowing!

BA

It's not just the lending criteria - it's also the new NCCP that are affecting who can borrow. As expected - the new laws just make it more expensive and difficult for the end consumer to borrow money.

 

[Propertunity]

Hey prop, your link disappears, can you post or PM the articles to me, please? Cheers JO

Try this one Jo.

http://www.news.com.au/money/banking/banks-back-to-risky-lending/story-e6frfmcr-1226140008162

 

[lizzie]

Mary in St Marys meanwhile doesn't understand why her tiler won't deliver let alone install the tiles she's paid for, because said tiler can't pay his last bill to the tile supplier to get Mary's tiles released on normal credit terms. Said tiler has no cash in the bank because he's a just a regular grunt living from week to week.

Good explaination ... and the reason why I pay for my own tiles/fittings rather than thru the builder - although the builder does pay for things like beams and gyprock, which I immediately get a bill for from him.

As for running out of work? I had trouble getting a builder for our reno's ... but when I say builder, I mean a recommended GOOD builder. They all seem tied up until February next year on reno's, but it will be interesting to see what happens to them after February.

The dodgy builders I interviewed could all start immediately.

There is not so much new building go on in Newie, but a lot of major renovation work. The reputable builders were also very specific about not giving a job quote but advising their hourly rate - which is fair enough in reno's.

I guess a big factor in reno-ing rather than building is that you don't have to necesarily borrow but can pay out of cashflow, don't have all the government charges (asides from some council fees if required) and you can still usually live in the place.

 

[josko]

Belbo not saying what you are saying is wrong but as an ancedotal to counter your comments my brother in law is a high end reno builder on the north shore of Sydney who also owns a half share in a landscaping business that services very high end clients. Average reno contract is around $800k and a couple hundred k landscaping job is not uncommon. He is having a very good time of it at the moment much better than 2009 and 2010. I can tell from his line of credit balance!!

So perhaps it's not that bad

We do alot of work in and around the North Shore and Northern Beaches.

Where I'm coming from, we know two big Architectural firms putting on more employees. Quite a few sub-divisions are coming through and our more established builders are still bringing in the work but I know they are struggling with cashflow.

Lots of reno's too, Lizzie. Seems there is a bit cash stashed under the mattress that has not gone to the retailers.

As in 2008, if you are established and have a good clientele base, you will slog it out. Expansion is out of the question as a small business for us.

Belbo, we have also turned down a massive, possibly 18-24mth contract where we decided the risk (cashflow, staffing, company liability, OVERDRAFT, Government change) was just too high.

Back to the banks: And then there are the valuations! Just got my 1mil product swap without a valuation, but took some pressure. I'll admit, I was holding my breath. A val would have killed it.

Thanks prop,

Regards JO