Overextending..?

[see_change]

Overextending

Reply: 3.1.3.1.1.1.1
From: See Change



I felt I was hard done by when my bank (Commonwealth dev Bank ) "forced" me to take out a loan at 14% fixed when I bought my business premesis in 89 . Current rate at that stage was about 12 % . When rates hit 18 % I felt a lot happier about that loan , but was still paying 18% on house as that loan missed out on being capped.

I personally know three people who went bankrupt as a result of over extending in property in that period.

While we may not see 18% again , to believe they may not go up significantly ( and plan accordingly ) is courting disaster and is not good risk management.

Happy and safe investing see change

 

[Rolf Latham]

Overextending

Reply: 3.1.3.1.1.1.1.1
From: Rolf Latham


Very Very true

Hence the concept of rate risk management !

ta


Rolf

 

[paulzag]

Overextending

Reply: 3.1.3.1.1.1.1.2
From: Paul Zagoridis


While I don't think 18% is around the corner look at it this way...

12% to 18% represents a 50% rise in rates.

Many people maxed out when rates were 6-7%. So if rates hit 10-11% it's the same scenario all over again.


Dreamspinner

 

[Robert]

Overextending

Reply: 3.1.3.1.1.1.1.2.1
From: Robert Forward


And isn't that going to be a fun time for those that are cashed ready to go.

I know I will be.

Robert