Australian house prices to explode

[grossreal]

hi s_t
sorry to say for me investing in banks would be the last thing that I would invest in.
it like asking a safe breaker which is the best safe to buy.
I like banks to lend me the most amount of money that is possible and bit more if thats possible.
there are lots of banks and theyre all good for different things.
I don't dislike any of them the only trouble with them is if you think investors are driven by the herd mentallity banks are the same even worse for me.
they have to make a profit and they go into areas that they shouldn't go and then when they get burnt its a case of well lets close down for a while and re start again.
it would be better to say
why and lets not do that again.
for me most banks are very similar to a macdonald store.
you start early and if you become good you go up the line very quickly.
and if you can work the system you get out and join another restaurant and try to run it or in the case of a bank go to another bank and run that.
the difference with a bank is there is lots of chances to move and not alot of fall out.
the hot to trot banks at the moment are
cba
bankwest
the cooled
are suncorp and anz
and the frozen or iced are westpac and st george.
the nab and ing are floating in no mans land as they are pushing for resi but staying still with comm from my view anyway.
would I invest in any of them
no
why
not into shares the only shares I hold are ipo shares.
to much into comm and developing at this stage but that may change.
depending on market movements.
so I am not a good picker of investing into share or banks.
I change my lenders more then the rba changes rates and lenders go up and down the risk pole every day some times they are hot for a market and then there not.
they will tell you that there risk profile does not change
well for me thats alot of bs and having talked to most there are forever changing there ideas.
I had a chat with a lender today and am hoping to do a deal with them if it all pans out and they hadn't spoken to me for about 3 years and i told them then file my details in the bin until you decide to start lending again.
well its like the movies with
honey I'm home.
funny old world this.
I would like to help s_t but I'm a user of credit not a dealer of it.
unless you are into short term finance then thats a different ball game

 

[grossreal]

hi
I have bad a bit of time to think about your question.
and I have a very simple question.
if you want to buy into lender do you buy into a current lenders
or one that will be a bigger lender.
if its the latter then look outside the current aust lenders.
we have currently a group of lenders that are in our harbour some have landed but others are sat there.
and they are alot bigger then the current market.
and you will see them.
and remember when you see them.
just send me a cp
so at lease I know you know

 

[boomtown]

It rather annoys me when people talk about the Australian property market when really they mean 3 suburbs in Sydney that most people havent even heard of.

 

[s_t]

Thanks mate.
Yeah, it is a balance - a bank investor doesn't want them lending on everything. Being trigger happy like the US military has its drawbacks...... but then being frozen with fear ain't exactly good at the other end. Maybe should have picked on the US banks earlier, not their military.

Do you think offshore lenders might struggle to get the typical mum and dad away from the familiar and trusted names? Commercial loans would be a different story though.

 

[grossreal]

hi s_t
I thought I would post with regards to banks
bred is in the pacific now and they have opened there branch they are already offering 1% interest rates under any other lender
and they have 14% of bendigo and I think 16 or 18% of bank of queensland.
if bred was to come here they would grab market share like no other.
as the y could cut rates to the european market rates and the bnk here could not match it.
as they are working of a different base rate.
so with regards to which bank to bank on.
for me bred
it just came across my desk that they are offering 1% under any rate

 

[ILoveProperty]

GR
If Bred try to get a slice of the Australian market, wouldn't banks like the CBA just cut their rates again. It may mean a drop in their profit from $5 billion to $4.5 billion to maintain market share?
Cheers
ILP

 

[grossreal]

hi ILoveProperty
yes they will the trouble is that they can't cut there rates to bred rates as bred is running off a lot lower base rate.
not sure if alot of bank can go into that war
as there cost of funds is no where near the cost of funds here.
and I would love to see a fight similar to the airline price fight of some years ago but in finance.
not sure how many banks would be dropping there variable in this market by 1 or 2% under the rba rate and be able to live
we have bank at 1 above rba and saying they can't stay open.
so it will be very interesting to see who or what happens

 

[D.T.]

Another day, another sensational article on the mass media on property price predications. Only this time it is not predicting doom and gloom


http://www.news.com.au/business/money/story/0,25479,23961580-5013951,00.html

As usual, facts the article based on are shallow and one-sided, which just demonstrates how you can spin things which ever way you want from the same set of data

Why not take the article into the same bank who wrote it and ask how much they're willing to lend on it?

 

[HiEquity]

not sure how many banks would be dropping there variable in this market by 1 or 2% under the rba rate and be able to live
we have bank at 1 above rba and saying they can't stay open.
so it will be very interesting to see who or what happens

Some of the things that immediately spring to mind:
- Why can't other banks access these lower cost funds? They have been using overseas funding through debt securitisation for years now so should be able to get a piece from where Bred gets it, if the risk is the same.
- If some new competitor does have a lower cost of funds for some unique reason and these funds are available for this market, why would they go in at 1% lower? They would just go in low enough to get the market share they might want eg 25 - 50 basis points tops. Further than that and they are just eroding their own margins because no-one else can compete already.
- Current term deposit rates are higher than this... why would they lend people money in a market where they could then turn around and plonk the money in a TD and make the margin? Why wouldn't Bred just put the money directly into an Oz bank term deposit?? In other words, just supply the Oz banks with debt securitisation and get their margin that way. Easier than setting up a retail bank and doing all the leg work dealing with real customers! Let the existing players keep making that pitiful margin...
- In a global market for credit all these things will even out, provided the risk is the same. Lower overseas rates for resi investment doesn't mean the risk is the same... and forex risk/hedging has to be factored in for them as well.

 

[s_t]

Thanks GR, that's interesting.

Maybe they have further ambitions regarding bendigo or BOQ!

- Why can't other banks access these lower cost funds? They have been using overseas funding through debt securitisation for years now so should be able to get a piece from where Bred gets it, if the risk is the same.

If all banks soley accessed [overseas] funding through debt securitisation (ie. common market), then loan rates would be identical throughout the world!

Does raise the question though - why aren't Jap banks (or banks from other low interest rate countries) coming here for the significantly higher loan rates?

- Current term deposit rates are higher than this... why would they lend people money in a market where they could then turn around and plonk the money in a TD and make the margin? Why wouldn't Bred just put the money directly into an Oz bank term deposit?? In other words, just supply the Oz banks with debt securitisation and get their margin that way. Easier than setting up a retail bank and doing all the leg work dealing with real customers! Let the existing players keep making that pitiful margin...

No control?

I don't know enough about banking to understand all the issues of funding loans through [overseas?] deposits, rules for foreign banks in Aus etc. to really know where this could lead.

 

[boomtown]

Does raise the question though - why aren't Jap banks (or banks from other low interest rate countries) coming here for the significantly higher loan rates?

They are.

Rams was funded by on the short US debt market. Not sure where it gets its money from now.