RHGL now 10.39%

[Ajax]

Haven't got the letter advising yet but helpful staff at RHGL told me when I was enquiring about a loan statement. If I am correct that is three rate rises outside RBA rises..at least 2 recently.

I have a file for the RHG loan (RAMS 85% lo doc taken out in July 2007 at 8.19%). It contains 5 Notices of Change to Interest Rate (with another on the way) since July 07.

 

[Andrew_A]

That sucks.

Has been a painful way to learn about securitized debt this whole episode, I'm one of the borrowers stuck in the firing line.

Hmm.. If they keep pushing it up .25% a month should be around 11.89% for Christmas.

Does anyone know why they are doing this? My observation of the credit markets is that they have stabilized and the worst is behind them, at least that's definitely the case for the moment. Why on earth is their cost of borrowing continuing to rise??

 

[redwing]

lowering their exposure and adding to the bottom line?

Stay with them...YOU PAY

You Leave and incurr break fees...YOU PAY

either ways a Bonus for them

Ditto Macquarie?

 

[Ajax]

Andrew A,

that's pretty much what I said to the helpful person I spoke with at RHGL...Why are RHGL increasing rates when the cost of money has fallen (slightly) since the peak of the credit squeeze in March 2008. Waste of my breath...I'm just an employee etc

From a shareholder's perspective (I'm not a shareholder) there would be an incentive for RHGL to increase rates now (to force borrowers to refinance) as they receive higher Defered Establishment fees. The DEF's make refinanced loans quite profitable..I'll be paying 2% DEF's when I refinace shortly. The concern for RHGL shareholders is that the company ends up with borrowers who refinance later (when they have held the loan for longer and deferred establishment fees are lower or non-existent).

I wonder to what extent this is all reviewable by the ACCC. It seems a very cynical way to operate a lending business by trying to wind up your loan book as soon as possible to trigger DEF clauses. The rate rises now seem unrelated to the actual cost of money.


Ajax

Sheesh...Redwing said what I said in one tenth of the words

 

[Buddybee]

After reading this thread, I've just logged on and my rate has gone up 0.50 basis points today to 10.44%.

And I checked the number of rate rises since 1/7/7 - there has been at least 7, not sure how many the RBA have done. When I say at least - their online system only tracks the last 3 months transactions, and their statements are 6 monthly so their is a void in the back half of every statement period, so I've phyiscally counted the increases I can see.

My rate has gone from 7.99% on 1/7/7 to 10.44% in a little under a year.

Now to decide if I'm going to ditch them once and for all and get my title, or leave it open.......

Cheers
Buddybee

 

[Rolf Latham]

Dunno bout RHG per se............but the Mac........well id agree they are looking to excise as much lo and no doc from their book as fast as possible..............dunno why


ta
rolf

 

[Spectre]

something to bear in mind.
rumours are that the new rams are removing the 90% low doc from sale before the end of the month.

I'm just wondering out loud... if the product does get quarantined then if you're say jumping from macq to rams then you need to consider you might be going from the frying pan to the fire (per se), and you better make sure that you have that 10% equity somewhere if you need to get out

 

[Andrew_A]

Ajax who are you refinancing with and what's the rate differential?

Even at 2% with the rate differential at the moment the ERF doesn't look that high compared to the cost of holding on, talk about a mess.

Andrew A,

that's pretty much what I said to the helpful person I spoke with at RHGL...Why are RHGL increasing rates when the cost of money has fallen (slightly) since the peak of the credit squeeze in March 2008. Waste of my breath...I'm just an employee etc

From a shareholder's perspective (I'm not a shareholder) there would be an incentive for RHGL to increase rates now (to force borrowers to refinance) as they receive higher Defered Establishment fees. The DEF's make refinanced loans quite profitable..I'll be paying 2% DEF's when I refinace shortly. The concern for RHGL shareholders is that the company ends up with borrowers who refinance later (when they have held the loan for longer and deferred establishment fees are lower or non-existent).

I wonder to what extent this is all reviewable by the ACCC. It seems a very cynical way to operate a lending business by trying to wind up your loan book as soon as possible to trigger DEF clauses. The rate rises now seem unrelated to the actual cost of money.


Ajax

Sheesh...Redwing said what I said in one tenth of the words

 

[Ajax]

Andrew_A,

am refinancing to RAMS. Have pm'ed you with more details. All depends on valuation.


Ajax

 

[asdf]

No docs and low docs with non-banks will end up like Charles Kingsford Smith's Southern Cross in the Powerhouse Museum. All the securitised lenders are jacking up the rates to get you guys off the books.... fast. Capital raising is S.L.O.W. Plus they are also paying a fortune for it - anywhere from 150-300bps over BBSW which hovers between 7.45-7.60% depending on where the sun shines really. This is wholesale funding and for prime tranches so by the time its offered to us plebs, you end up back in the 80s and early 90s when you wake up one morning to find that the RBA's jacked up rates by 1% overnight. And again 2 days later without any warning. Fun times...

 

[PWL]

Lets just all hope that rates stay on hold for a while, it will be interesting to see what happens over the next few months. It has definitely reduced the amount of buyers looking for properties at the moment.

 

[redwing]

No docs and low docs with non-banks will end up like Charles Kingsford Smith's Southern Cross in the Powerhouse Museum. All the securitised lenders are jacking up the rates to get you guys off the books.... fast. Capital raising is S.L.O.W. Plus they are also paying a fortune for it - anywhere from 150-300bps over BBSW which hovers between 7.45-7.60% depending on where the sun shines really. This is wholesale funding and for prime tranches so by the time its offered to us plebs, you end up back in the 80s and early 90s when you wake up one morning to find that the RBA's jacked up rates by 1% overnight. And again 2 days later without any warning. Fun times...

And the solution?


PS: Interesting link to Bankwest Rate Tracker

 

[Rolf Latham]

Hiya

Those rumours about the 85 and 90s with the new RAMS arent rumours.

Youd want to be formally approved by the 25th of June I think, and if you are being promised the 1000 break fee rebate that usually comes from the franchisee against their upfront, and with many of them chasing westpac in the courts at the moment according to the media reports. So it seems that not just the borrowers having issues.

MGIC, their mortgage insurer for that product is jumping ship................not surprising seeing that they dumped just about all the other at the edge funders when they were doing 80 % no docs.

I do feel the exposure to New rams raising rates is a little different than the old Rams, remember its a different funding model, BUT Lukey may be right, if you have a variable rate NEW Rams lo doc and its variable, remember, its exactly that, variable at the whims of the market AND the whims of the funder/ mortgage manager

The core attractions for the old RHG products were they would go to lo doc 85 % without effective GST or ABN registration, and that got a lot of clients through the door, which now seems like a revolving door.

ta
rolf

 

[Rolf Latham]

Hiya Red

Bwest Rate tracker isnt a lo or no doc product replacement for Old Rams or Mac

An ok option for some deals where a simple loan is suitable, BUT dont expect to be able to settle for a loooooooooooooooong time.

Just had to shell out for a licence to occupy this week because Bankwest couldnt settle a simple 80 % PAYG deal in 5 weeks, even though conditional was issued 4 plus weeks ago..........

ta
rolf

 

[WinstonWolfe]

I can't see things improving for those with old Rams loans. There's $1.7 billion of calls on RMBSs this year...their option is to repay them or absorb a higher coupon rate.

This doc provides some insight.

 

[Bradsdad]

Hiya Red

Bwest Rate tracker isnt a lo or no doc product replacement for Old Rams or Mac

An ok option for some deals where a simple loan is suitable, BUT dont expect to be able to settle for a loooooooooooooooong time.

Just had to shell out for a licence to occupy this week because Bankwest couldnt settle a simple 80 % PAYG deal in 5 weeks, even though conditional was issued 4 plus weeks ago..........
ta
rolf

I have one with them at the moment still waiting on formal approval after 31 days (client to blame for half of this). Called 2 of their BDM's and got no reply, emailed one of them and no reply.....phoned again and managed to get through to her.........said she would have it sorted for me yet now 2 days later still nothing. As for the other BDM still no call.
All this for a fixed lock rate facility. Starting to wonder if the refinance will go through within their 90 day timeframe.
I think you missed a few "o"s on LOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOONG

 

[long88]

i am with cba, variable for 8.76%, lo doc, that 10% is way too high.

i bought their rhg shares before, and have got out of it, it has been declining, and just waiting to be folded up. i reckon rhg just try to squeeze every single cents out from its customer.

 

[handyandy]

If I was running the old Ram's then I would do exactly what they appear to be doing - winding down the loan book fast.

They can no longer write new business and are at the mercy of the money markets with capital harder to raise because of their situation.

Why not motivate everybody to refinance and make +2% on the break fees. This would be much easier than operating a shrinking loan book with proportionally increasing costs as time goes on.

Get rid of as many loans in the shortest possible time (with the refin bonus) then sell the remaining loan book at a slight discount, financed by the refin funds and close down what remains of the old rams.

Cheers

 

[Rolf Latham]

Hiya handy

Ding !

I was having the same chat with someone from Macq bank the other day

ta
Rolf

 

[oc1]

Hiya

Those rumours about the 85 and 90s with the new RAMS arent rumours.

Youd want to be formally approved by the 25th of June I think, and if you are being promised the 1000 break fee rebate that usually comes from the franchisee against their upfront, and with many of them chasing westpac in the courts at the moment according to the media reports. So it seems that not just the borrowers having issues.

MGIC, their mortgage insurer for that product is jumping ship................not surprising seeing that they dumped just about all the other at the edge funders when they were doing 80 % no docs.

Rolf, where would one stand if they are settling on land now (to extract equity) and applying for construction soon after?