IMF says:Australian Housing a SURVIVOR on the World Stage

I'm just saying that credit card rates and business rates haven't been reduced as much as residential mortgages. The banks are keeping up their margins one way or another.
 
Credit cards have always been seen as expensive credit as it is an unsecured loan, nothing new there.
I am surprised they have dropped at all.

Are you certain business credit wont be reduced? I seem to remember it was last cycle, why do you think it wont this time.

Dave
 
This doesn't make sense, homeowners aren't setting prices, sellers and buyers are. Buyers have access to lower interest rates via fixed and variable loans. Both are lower than they were a year ago.

The ability of banks to pass on rate cuts isn't what I was commenting on, neither was the original article.

If you are only allowed to sell something that you own.... and you are selling a house... does that by default not make you a homeowner who is also a seller

I have a variable mtge on my ppor - rate has dropped
 
I'm just saying that credit card rates and business rates haven't been reduced as much as residential mortgages. The banks are keeping up their margins one way or another.

Actually, they are increasing their margins by doing this. Which they have to do because they got too low in the securitisation era to be able to cope with all the bad debts that are now coming out of the wood work.

I expect we will see some competition emerge on the business / cc side soon enough (as we already have) that will reduce these margins again once the banks have some more confidence in their bad debt provisions from all of this, which is the great uncertainty. These concerns may be overblown as the higher margins will allow the banks to "assist customers" through this period without foreclosing, although I understand this hasn't been the experience of some on this board.

I guess we will soon see how effective Mr Rudd's "social contract" with the banks to be nice in return for the govt guarantee really is...

Either way a healthy banking system that is ready to lend is critical to house prices and we are one of the few western countries who have this, so I don't begrudge banks for their profit...
 
Credit cards have always been seen as expensive credit as it is an unsecured loan, nothing new there.
I am surprised they have dropped at all.

Are you certain business credit wont be reduced? I seem to remember it was last cycle, why do you think it wont this time.

Dave

I'm not commenting on the future, I'm commenting on the current. I don't know what will happen tomorrow with 100% certainty.
 
If you are only allowed to sell something that you own.... and you are selling a house... does that by default not make you a homeowner who is also a seller

Yep, but how does having a fixed rate affect your decision to expect/accept a lower or higher price? If rates are falling, the person buying your house will have access to cheaper credit (whether it be fixed or variable). As a vendor, I'd be expecting them to pay more if their money is getting cheaper.

If I'm selling because I've lost my job and my interest rate hasn't moved because I'm on a fixed loan, the issue isn't the fixed loan, its losing my job. Mr Brooks is still off the mark.
 
Either way a healthy banking system that is ready to lend is critical to house prices and we are one of the few western countries who have this, so I don't begrudge banks for their profit...

Yep, all those who keep complaining about high bank fees and margins may actually be saved by these. I think house prices will be either kept afloat or sunk by the actions of banks, and it is in their best interests to keep prices in the positive if they can.

This and employment are the real drivers of house prices, immigration and interest rates aren't even close.
 
Yep, but how does having a fixed rate affect your decision to expect/accept a lower or higher price? If rates are falling, the person buying your house will have access to cheaper credit (whether it be fixed or variable). As a vendor, I'd be expecting them to pay more if their money is getting cheaper.

If I'm selling because I've lost my job and my interest rate hasn't moved because I'm on a fixed loan, the issue isn't the fixed loan, its losing my job. Mr Brooks is still off the mark.

Nope. He is right on the mark. If you're fixed at 8%, and you can just barely cover the repayments, and then you lose your overtime, or take a paycut or your partner loses her job, or meet with an unexpected medical expense... then you're in trouble. You might have to sell your house. You might have to accept whatever low price you're offered.

But if you were on a variable rate of 8%, which has just fallen to 5%, with more falls to come, then you're probably not so worried about any of the above happening. If you were planning to sell anyway, then you're not under pressure to accept lowball offers.

I don't see why this is so hard for you to understand, unless this is really all just to entertain the D&G audience... :D
 
Being on a fixed rate in the US doesn't have the same implications are here. The sort of economic loss provisions that lock people in here in Oz don't exist under the US funding regime.

You can jump in and out of a fixed rate as easily as a variable one. It's one of the reasons fixed rates are so popular over there.
 
Being on a fixed rate in the US doesn't have the same implications are here. The sort of economic loss provisions that lock people in here in Oz don't exist under the US funding regime.

You can jump in and out of a fixed rate as easily as a variable one. It's one of the reasons fixed rates are so popular over there.

Yep, but we wouldn't want reality to get in the way of an good argument....
 
Nope. He is right on the mark. If you're fixed at 8%, and you can just barely cover the repayments, and then you lose your overtime, or take a paycut or your partner loses her job, or meet with an unexpected medical expense... then you're in trouble.

No you're not, you refinance at a lower rate, because you can do that in the US, as long as the banks are still lending and passing on the lower rate.
 
No you're not, you refinance at a lower rate, because you can do that in the US, as long as the banks are still lending and passing on the lower rate.

No. They can't easily refinance because...

1) They have to pay break fees. Many of these borrowers are sub-prime and need all their spare cash for booze and weed. Where will they find the money for the break fee? What's in it for the banks if they let all their fixed borrowers refinance at lower rates with no penalty. Do you think the banks just like to take on this extra risk for fun? :rolleyes:

2) You can't refinance anyway if your property has fallen significantly in value. The bank will want the equity topped up.

3) Most of them are on non-recourse loans. Why would they refinance, pay a break fee, top up the required equity (all done with money they don't have of course) when they can just hand the keys back to the bank and walk away.

4) It's different here. :D
 
Dave,

For me its a case of "No news there"... I've been arguing for a while its different over here and its only been the perma-bears who've hung tenaciously to their forlorn hope of rapid house price falls that have been arguing its all the same the world over. It really is a different property market based on completely different fundamentals to the US, UK, Spain etc so cannot be tarred with the same brush.

Thanks for the link though. Good to see the IMF is now on the side of the "not going to crash" crowd. That's one less source the perma-bears can quote now. We'll whittle them down one analyst / international body at a time... ;)

Cheers,
Michael

Hi Michael as one of the crash crowd I had a real giggle when I saw the IMF agrees with the likes of the blue sky brigade. Old George Soros has been betting against them for decades and has made his fortune giving their forcasts the proverbial thumb on the nose and fingers wiggling.

I'm sorry that the 40-50% residential property collapse in 2009/2010 is going to impact so hard of many of the posters on this site. However I will take great pleasure seeing those "experts" at the IMF yet again shown to have clay feet and no clothes. If you have seen poor sparkey's post about her LOC being called in by the nab you can get a taste of what is coming. If your LVR's are over 30% your in trouble.
 
Hi Michael as one of the crash crowd I had a real giggle when I saw the IMF agrees with the likes of the blue sky brigade. Old George Soros has been betting against them for decades and has made his fortune giving their forcasts the proverbial thumb on the nose and fingers wiggling.

I'm sorry that the 40-50% residential property collapse in 2009/2010 is going to impact so hard of many of the posters on this site. However I will take great pleasure seeing those "experts" at the IMF yet again shown to have clay feet and no clothes. If you have seen poor sparkey's post about her LOC being called in by the nab you can get a taste of what is coming. If your LVR's are over 30% your in trouble.

No need to call me 'poor' that was then this is now and that situation will be resolved one way or another so don't you worry your pretty little head about it!

Still wondering when this alleged collapse will be so long as people are buying property, people selling it for a living know that they are, they don't rely on the old news you guys must be looking at. Sorry I forgot only top end city stuff exists doesn't it?
 
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Hi Michael as one of the crash crowd I had a real giggle when I saw the IMF agrees with the likes of the blue sky brigade. Old George Soros has been betting against them for decades and has made his fortune giving their forcasts the proverbial thumb on the nose and fingers wiggling.

I'm sorry that the 40-50% residential property collapse in 2009/2010 is going to impact so hard of many of the posters on this site. However I will take great pleasure seeing those "experts" at the IMF yet again shown to have clay feet and no clothes. If you have seen poor sparkey's post about her LOC being called in by the nab you can get a taste of what is coming. If your LVR's are over 30% your in trouble.


Here or the US ?

Will they ever rise again, or have we fixed the problem of ever increasing property ? I assume that nothing else is to be permanently corrected, only housing ?
 
the impact of such an event would be way beyond just the posters on this site. the construction industry and all support industry would shut down and would take an eternity to recover. the strangle on property supply would see rents triple, quadruple... who knows where that would stop. at least rent would finally reflect the value of consumption that it should. interest rates would be at near 0% and the value of the dollar would be negligible so the cost of everything would triple at least and fuel would follow suit. the social upheaval would be immense as unemployment goes way up into double figures.

it could happen. the result would possibly see a civil war, WA would no doubt break away from the federation and after a few decades of pain we may see Australia split up into the 20 or so countries that it should be.

the vaccuum created bythe collapse of the US may be the catalyst. It will just be interesting to see if Oz can survive the after math of mass illegal immigration and invasion that would follow. What are the thoughts of Chinese invasion? they have the military and numbers to do it. Aus would make a great input for complete vertical integration and it makes a lot of sense for them to do it.
 
the impact of such an event would be way beyond just the posters on this site. the construction industry and all support industry would shut down and would take an eternity to recover. the strangle on property supply would see rents triple, quadruple... who knows where that would stop. at least rent would finally reflect the value of consumption that it should. interest rates would be at near 0% and the value of the dollar would be negligible so the cost of everything would triple at least and fuel would follow suit. the social upheaval would be immense as unemployment goes way up into double figures. i think that's a depression, isn't it? either way - no one would be want this scenario, therefore preparing for it is folly.

it could happen. the result would possibly see a civil war, WA would no doubt break away from the federation and after a few decades of pain we may see Australia split up into the 20 or so countries that it should be. don't get me started on secession - that argument is as old in my family as the first world war. i'm all for it - lets see how Canberra holds up without WA...

the vaccuum created bythe collapse of the US may be the catalyst. It will just be interesting to see if Oz can survive the after math of mass illegal immigration and invasion that would follow. What are the thoughts of Chinese invasion? they have the military and numbers to do it. Aus would make a great input for complete vertical integration and it makes a lot of sense for them to do it. i'm looking forward to seeing this Taiwanese independance thingo blow over. If the US help Taiwan gain independance from China, we will all be drafted into the war to end all wars. they'd take Singapore first though, so i guess we've all got SOME time to jump on a boat to Hawaii.

i'm not allowed to give you anymore kudos.
 
I’m intrigued. Can I ask what motivated you to buy recently – given those dire expectations?
He knocked his wife up :D

Myself I'm loving these interest rate cuts, I'm down to $40pw for my place - less than I spend on petrol. I still don't think I can sell the house though, especially in this climate, and I'm going to be a stereotyped stubborn bugger and not let anyone buy it for less than I want for it, which is the main reason that houses sit for a long time on the market and the reason that bubbles like this can take really long times to pop - stubborn sellers.
 
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