We have a developer that owes us quite a few thousand. he has two major development sites on the go. He subdivides 10-20 lot sub-divisions, builds homes and sells. he had all his eggs with the NAB....
This is what he had to say to me last week.
The Nab rang him about five weeks ago and told him they were:
1. Changing his LVR to 65% from 75%.
2. Re valuing his sites.
3. Freezing his $500,000 line of credit.
Becasue he was one of their "bigger" clients and therefore a higher risk.
The vals came in way below - he did not tell me how much but at a conservative guess- 10-15%.
He therefore, lost his LOC completely, and then lost all his equity.
Now to make matters worse, he had three contracts out on three of his OTP's. All three have fallen through AT SETTLEMENT because the bank has re-nigged on the pre-approval of three different clients. I have no idea if this was becasue the val on the OTP's had dropped considerabley or whether it had to do with new lending requirements.
So where we have FHB's coming into the market.......how are the vals going to hold up and how are they going to get through the new lending criteria?
I have already had this happen to me with a contract on an IP already.
Any of you with millions of debt with one bank should watch those lines of credit.
Regards JO