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The Curiosity Only Loan Dilemma – The Assets Essential Weekly 24 Feb 2018





In this edition of our finance and house information critique we aim in on house loan underwriting, and discuss the size of the IO mortgage marketplace, and the influence of recent regulatory modifications.

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9 comments

  1. Thanks Martin.Q: Is that APRA data re interest only loans suggesting that all IO loans secured against property are for the purpose of ownership of that property? (when in fact they are not), and if so, is the % loans/ value  figure(s) then rendered incorrect?

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  2. Banks see a couple as risk positive and just calculate the LTI as 2 individuals which basically just doubles the LTI from 3.5x to 7x.
    That's where NAB and other banks get that figure from.
    In this case the risks are magnified to a huge degree.

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  3. MARTIN, CHECK OUT WHAT BUFFETT SAYS ABOUT BORROWING TO INVEST;
    https://www.cnbc.com/2018/02/24/highlights-from-warren-buffetts-annual-letter.html

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  4. Hi Martin, thank you for a good analysis. You commented in a recent video on APRA's new capital rules but I was wondering if you followed the APRA crisis resolution bill that was approved by only 7 senators in what looks like a bit of a hurry (and no media coverage what so ever). I don't quite get the part of the story with bailing in of bank deposits to save the failing banks. Scott Morrison commented that no way it could happen, but the bill was rushed before the proposed amendments that would clearly guard depositors could be debated (One Nation lodged such amendment I believe). Would appreciate your opinion on this.

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  5. 3.5 times one income, 1 times second income. So if both members of couple both earned 60k (average salary) then they should only be allowed to borrow 4.5 x 60k = 270k. With a 20% deposit of 54k. Total 324k. Hardly enough to buy a 1 bedroom flat in most capital cities in Australia.

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  6. I would of thought that it would be important for the mortgage brokers to be independent to the lenders to give impartial advice. Aussie would more likely recommend CBA loans because that is who owns their company. Also mortgage brokers would recommend the loans with the highest commissions rather than the best loan for the customer. Good points.

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  7. So from what I understand banks are still lending out risky loans to greedy investors but the house prices are coming down when do you think the interest rates will start to rise ? Because in my hypothesis that's the only way to completely collapse the housing market

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  8. Hi, love what you do, fantastic.

    I don't understand the goal. The Fed just propped up their bond market to the extreme and announced more Q.E. Asset bubbles from low interest rates for to long and money printing. Seems to me that we're taking away any future for our children other than to be debt slaves or have no assets at all. Banks have now the power, not only to be bailed out but also bailed in. If it's not coming down, why are these changes needed? Why are they now legally able to steal our deposits and more? We seem to be extended, world wide, beyond comprehension. Fiscal restraint no longer exists. Are we blindly walking into a trap?

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  9. Thanks Martin. I watch all your videos

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