RAMS sheared
- Thread starter alexlee
- Start date
I didn't realise RAMS and Allco finance group were that closely 'linked'
Looks like the market is still smellying something bad, RHG down 12.5% today back to 70c. It won't recover fully until they announce new financing - and the rate at which they get it.
Maybe Kinghorn will submit a takeover offer with his new found cash!!!
Interesting to look at the chart of Allco finance as well (code AFG) - ugly!
hi TJamesX
you would not habve wanted to buy your shares in april at $12.83 into allco
looks a bit like a heart attack and you know what happens when you have a heart attack either something shocks you and the beat start back up the hill or your in big problems.
just my view looking from the out side.
you would not habve wanted to buy your shares in april at $12.83 into allco
looks a bit like a heart attack and you know what happens when you have a heart attack either something shocks you and the beat start back up the hill or your in big problems.
just my view looking from the out side.
Don't worry,
One of the big 4 sharks will buy them out one of these days.
I guess they are waiting for the subprime to mature so that they pay as little as possible.
Cheers
From the asx website...........
ASX and Media Release Tuesday, October 2, 2007
RAMS announces restructure of business
Sale of brand name and distribution business to Westpac
RAMS Home Loan Group Ltd (ASX:RHG) today announced a restructuring of its business with the sale of its brand name and its distribution business to Westpac Banking Corporation for $140 million.
In addition, Westpac will provide up to $2 billion of financing to fund new business and to refinance a proportion of RAMS’ outstanding US XCP (extendible commercial paper) program. The sale of the brand and distribution business is subject to approval at a shareholder meeting planned for late November.
RHG directors have unanimously recommended the restructuring to shareholders, and intend to vote their shares in support of this proposal, in the absence of a superior proposal.
RHG chairman John Kinghorn said RHG and Westpac late last night signed a share acquisition agreement for the distribution business and the RAMS name, one of the leading brands in the Australian mortgage industry.
Subject to RHG’s shareholder approval and the terms of the agreement, the sale is expected to complete in January 2008. A summary of the agreement’s key terms is attached.
The RAMS distribution business includes 92 RAMS Home Loan Centres operated by 53 franchisees and agreements with all major broker aggregator groups.
The $140 million sale price will be reduced by future trailing commission for RAMS’ franchise network, estimated at $15 million, which will be determined on completion.
As a result of the transaction RHG will remain a listed entity, continuing to service and amortise the existing loan book and all new business settled up to and including 14 November 2007.
ASX and Media Release Tuesday, October 2, 2007
RAMS announces restructure of business
Sale of brand name and distribution business to Westpac
RAMS Home Loan Group Ltd (ASX:RHG) today announced a restructuring of its business with the sale of its brand name and its distribution business to Westpac Banking Corporation for $140 million.
In addition, Westpac will provide up to $2 billion of financing to fund new business and to refinance a proportion of RAMS’ outstanding US XCP (extendible commercial paper) program. The sale of the brand and distribution business is subject to approval at a shareholder meeting planned for late November.
RHG directors have unanimously recommended the restructuring to shareholders, and intend to vote their shares in support of this proposal, in the absence of a superior proposal.
RHG chairman John Kinghorn said RHG and Westpac late last night signed a share acquisition agreement for the distribution business and the RAMS name, one of the leading brands in the Australian mortgage industry.
Subject to RHG’s shareholder approval and the terms of the agreement, the sale is expected to complete in January 2008. A summary of the agreement’s key terms is attached.
The RAMS distribution business includes 92 RAMS Home Loan Centres operated by 53 franchisees and agreements with all major broker aggregator groups.
The $140 million sale price will be reduced by future trailing commission for RAMS’ franchise network, estimated at $15 million, which will be determined on completion.
As a result of the transaction RHG will remain a listed entity, continuing to service and amortise the existing loan book and all new business settled up to and including 14 November 2007.
Just read through the ASX statements, it's seems as though its sort of like a takeover by Westpac but not quite....
- Westpac buy's the total distribution network and brand name (essentially all the future business), for 140mill (minus trailing commissions)
- Westpac does not buy the existing loan portfolio (14b) or existing funding liabilities
- Westpac funds loans from Nov 2007, and helps in sydicated refinancing of existing loan book
Seems to me essentially that the business ceases to exist (independantly), and becomes a vessel for the existing loan book - which is still subject to refinancing.... hard to make heads or tails of it, so I look to the market for guidance..... shares down 21% so far today
back to 67c
TJ
- Westpac buy's the total distribution network and brand name (essentially all the future business), for 140mill (minus trailing commissions)
- Westpac does not buy the existing loan portfolio (14b) or existing funding liabilities
- Westpac funds loans from Nov 2007, and helps in sydicated refinancing of existing loan book
Seems to me essentially that the business ceases to exist (independantly), and becomes a vessel for the existing loan book - which is still subject to refinancing.... hard to make heads or tails of it, so I look to the market for guidance..... shares down 21% so far today
back to 67cTJ
I'd say there is a little way to go as far as risk spreads go (see chart);
RAMS still tells me I can hypothetically borrow 375k on an after tax income of 48k (at a rate of 7.75%). That would leave me $356pw to live off and $558pw to pay the interest on the mortgage (assumes no principle repayments).
Can someone tell me where we are in the credit cycle??
Attachments
Can someone tell me where we are in the credit cycle??
Ask me no questions and I'll tell you no lies.........
Confirmed. My Rams rates went up 0.3% from 3/10.
I haven't received any notifications from Rams. Just seeing an extra line in the online account statement.
Hmmm, time to switch?
Ditto also. Would have been nice to receive prior written confirmation.
I must get my loan docs out to see if they've breached contract conditions.
Confirmed. My Rams rates went up 0.3% from 3/10.
I haven't received any notifications from Rams. Just seeing an extra line in the online account statement.
Hmmm, time to switch?
It doesn't hurt to investigate it.
I am surpriced that they have increased the full doc rates.
I am guessing that they only do this to selected customers
who are in the early years of their loan and who are unlikely to switch to another lender fearing the RAMS exit fees...
Cheers
Ah, yes, speculation is a wonderful thing, isn't it!
My Origin Low Doc Line of Credit has just been increased by 0.40%
My RAMS Low Doc Line of Credit has just been increased by 0.25%
MMMMM, perhaps Origin has some subversive plan to wallop borrowers who have just gone past the 3 year mark and have no Deferred Establishment / Early Repayment Fees to pay? Maybe they want us all to leave? These questions and many more as I attend lots of meetings and read lots of articles on the world credit crisis. Maybe we should just go back to regulated banks and no consumer credit. Anybody else remember what happened when the Menzies Government froze domestic credit in 1962? I can remember the headlines very clearly, and how worried my parents were. The credit freeze didn't affect them directly, but they saw with horror the effect on local businesses and employment.
It took a few years for Australia to recover from that debacle.
What is happening now on a global scale is unprecedented. For those people who think that bashing one lender proves some sort of point are actually missing the point. Years of draining heavy industry out of America and the de-tooling of huge cities, a transient labour force with how much? for a minimum wage, a completely different domestic financing and mortgage system to here, and a hugely expensive war, are just some of the problems faced by one country, but that one country is a major player in world financial markets.
Ten years ago - and I know, for I often meet ten year long customers - the non-bank lenders presented the first real opportunities for borrowers. The Aussies, the RAMS, the Wizards, challenged the system and provided the funds for many families to buy their own homes. I frequently hear people say 'RAMS were the only lender who would take us on' and there is often a lot of emotion in the words.
For those of you with variable rates, you have the option to fix the rate at any time. If you choose not to do this, then accept the fact that a variable rate is just that, variable, and will rise and fall with the market.
For whatever reason we are with one lender or another, well, one of my own loans has just hit 9.17%. I have had this particular loan since August, 1998. It is with a major lender, one of the Big Four banks. Maybe they want me to leave? No, I don't think so. Am I going to snivel in my tea because they are charging me market rates which, by the way, they did not write and ask my permission to increase the rate, but I will see it on the loan statement some time in the next six months.
This lender refinanced my loan with another Big Four bank, which had lent me the money to buy, yes you guessed it, a bank. Very pleased they did lend me the money, as my bank has nearly trebled in value since 1997. I paid a higher interest rate in 1997 than I do now, even at 9.17%. I could snivel, I suppose, but I have never found snivelling to be very productive. I'd rather just get on with it.
Cheers
Kristine
My Origin Low Doc Line of Credit has just been increased by 0.40%
My RAMS Low Doc Line of Credit has just been increased by 0.25%
MMMMM, perhaps Origin has some subversive plan to wallop borrowers who have just gone past the 3 year mark and have no Deferred Establishment / Early Repayment Fees to pay? Maybe they want us all to leave? These questions and many more as I attend lots of meetings and read lots of articles on the world credit crisis. Maybe we should just go back to regulated banks and no consumer credit. Anybody else remember what happened when the Menzies Government froze domestic credit in 1962? I can remember the headlines very clearly, and how worried my parents were. The credit freeze didn't affect them directly, but they saw with horror the effect on local businesses and employment.
It took a few years for Australia to recover from that debacle.
What is happening now on a global scale is unprecedented. For those people who think that bashing one lender proves some sort of point are actually missing the point. Years of draining heavy industry out of America and the de-tooling of huge cities, a transient labour force with how much? for a minimum wage, a completely different domestic financing and mortgage system to here, and a hugely expensive war, are just some of the problems faced by one country, but that one country is a major player in world financial markets.
Ten years ago - and I know, for I often meet ten year long customers - the non-bank lenders presented the first real opportunities for borrowers. The Aussies, the RAMS, the Wizards, challenged the system and provided the funds for many families to buy their own homes. I frequently hear people say 'RAMS were the only lender who would take us on' and there is often a lot of emotion in the words.
For those of you with variable rates, you have the option to fix the rate at any time. If you choose not to do this, then accept the fact that a variable rate is just that, variable, and will rise and fall with the market.
For whatever reason we are with one lender or another, well, one of my own loans has just hit 9.17%. I have had this particular loan since August, 1998. It is with a major lender, one of the Big Four banks. Maybe they want me to leave? No, I don't think so. Am I going to snivel in my tea because they are charging me market rates which, by the way, they did not write and ask my permission to increase the rate, but I will see it on the loan statement some time in the next six months.
This lender refinanced my loan with another Big Four bank, which had lent me the money to buy, yes you guessed it, a bank. Very pleased they did lend me the money, as my bank has nearly trebled in value since 1997. I paid a higher interest rate in 1997 than I do now, even at 9.17%. I could snivel, I suppose, but I have never found snivelling to be very productive. I'd rather just get on with it.
Cheers
Kristine
Rates have always been a balance between the institutions wanting to charge you as much as possible (fair enough, since they should be maximising profits) and competition.
I wouldn't read any big conspiracy into it. Banks will charge as much as they can get away with. If we don't like it, refinance. In retrospect, it was naive to think that the fully securitised lenders would always have the same rates as the diversified, deposit taking banks. We've just had a few years of very loose credit. Now it's the reverse.
There's no conspiracy and no moral element to this, just the market. Just like I didn't complain when the the rental market was crap for landlords a few years ago and now my agent just suggested I raise the rent from $315pw to $350pw for one of my townhouses.
Alex
I wouldn't read any big conspiracy into it. Banks will charge as much as they can get away with. If we don't like it, refinance. In retrospect, it was naive to think that the fully securitised lenders would always have the same rates as the diversified, deposit taking banks. We've just had a few years of very loose credit. Now it's the reverse.
There's no conspiracy and no moral element to this, just the market. Just like I didn't complain when the the rental market was crap for landlords a few years ago and now my agent just suggested I raise the rent from $315pw to $350pw for one of my townhouses.
Alex
Some more than others, especially those with a less competitive or higher risk business model.
Makes me wonder how much of a hit non bank lending has taken in the last month or so. It would be easy to imagine many people want to avoid the unpredictable rate rises of a non bank lender.
Where the >0.25% rate rises really hurt is when RBA starts announcing rates decreases. You can bet your bottom dollar the RAMS of the world will be dropping no more than 0.25%. No 0.3%s on the way down....
In a competitive market less competitive lenders shouldn't even survive. Obviously RAMS, Aussie, Bluestone, etc DID have a competitive (AND higher risk) model for them to have picked up market share (namely by fully securitising and lending to customers that the big banks may not have been willing to lend to at first.
I just see all this as a cycle. Low cost competitor comes in, maybe they continue to take market share, maybe they don't. They took a lot of market share in the last couple of years, made good profits, and now they're suffering. That's just a normal business cycle.
The big banks certainly wouldn't have given us the discounts to the standard variable rate that they do without the presence of the non-bank lenders. What people should have realised is that the non-bank lenders were inherently more risky than the bank lenders, and that in a credit crunch they would get higher rate rises. Still, for many people, as Kristine said, they could only get loans from the non-bank lenders.
I see it as: banks and non-bank lenders offer a service. Customers have to think about whether this service is sustainable in the future. I have no sympathy for someone who says 'I took out a RAMS or Aussie loan because it was cheap, and now I'm getting hit with bigger rate increases!' Yeah, well, you should have thought more about it before taking out the loan.
Alex
i see it as mortgage brokers who have the best interests of their clients at heart, would inform of the risk of non bank lenders.
Does anyone know of a MB who had a witless clue of the US sub prime exposure risk of Aussie non bank lenders? If MBs had no idea, then what's the chance of the end consumer getting their head around it?
Kristine, I agree totally and have no gripes with the rise. After all it is variable like you say and thats whats been elected by myself.
What Im querrying is the lenders terms of conditions in relation to written notice to be given.
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