Ive posted a few times here about my g/f and I on how we are about to re-finance with Rams, well we have all the paperwork here now but with all the major loss that there takeing in the market is it still ok to go with them? or should I stay put.
I dont think i would be rushing in to refinance with a securitised lender at the moment but everyone to their own.
Richard Taylor | Australia's leading private lender
CEO of CBA was warning that securirised lenders funds are getting more expensive and rates may rise.
I reckon I would personally be heading for one of the big four myself.
Don't sign up with RAMS!!!
TheBish wrote:Don't sign up with RAMS!!!Yeah, but why?
Storm in a teacup – and lots of media and even 'industry pundits' just love to add fuel to the fire if it sounds sensational . If Rams had not just listed on the stock exchange prior to the probs with the US market, and the subsequent battering of their share price on the ASX has taken as well, they would not have been singled out over any of the other non-bank lenders. Aussie Homeloans have concurred, Wizard have been featured…..one other lender has decided to put off listing on the Asx……Everyone is essentailly in the 'same boat', but the so called' big 4' banks have the benefit of using funds deposited over the counter to lend, rather than 'buying money' which is the simplest way of explaining things. Rams has three main sources from where it secures it's funds – one of them is affected due to the US housing market problems. Did you see the announcment that first led to all of this media coverage? It said in effect ' If the US market etc etc problem reamins as is, it will have an effect on our profitability'. Funny thing that even the the CEO of the Commbank indicated they may also raise their rates along with some of the other lenders. (dispite the billions of profit reported this year) . What needs to borne in mind, is that the majority of non bank (thus 'securitised lenders' ) usually offer rates and features (and importantly, personalised service if a 'retail' rather than a 'wholesale' lender ) of a more competitive nature than banks, which is why so many people choose to finance their property with them – so if that gap close it is not the end of the world as they say. All of Rams (and I would assume others mentioned) loans are Mortgage Insured.
By all means if you feel uncomfortable refinancing with any lender, either wait or don't.
Check out todays SMH, the article by Malcolm Maiden.
One exerpt reads ' Australian Homeloans are highly rated generally, and there is no credit quality problem for Rams. It is an A-Rated issuer, 100 percent mortgage insured, and still pumping commercial paper into the market as it writes new loans here. But the cost of funds has risen quickly, by enough for it to warn yesterday that there could be a material financial impact in it's first financial year as a listed company. It insinuates the 'big banks' must be tempted by the current share price, (even more than the chunk of Rams shares now already owned by them no doubt……..)
Hope that helps explain things a bit. If nothing else, a lot of people are learning about how the actual money marker works as a result of the US problem.TheBish wrote:Don't sign up with RAMS!!!Conversely – should I be looking at getting out of my RAMS home loan? Fees will be high as I've only had it nine months – but may be worth it in the long run?
Hey RL. See my post above. You will pay for an early exit. However, if anyone with a variable rate loan is concerned about the current market, why not look at splitting and fixing a portion of your loan. Fixed rates are varied, but at the present time, another rate rise of .25 will be more than the current fixed rated. Probably a good time to do it as any for people on a tight weekly cashflow budget. Might coast a couple of hundred bucks depending on the lender, but could be money well spent IMHO. All the best.
Whatever you do DON'T sign with RAMS….
They listed @ $2.50 on the share market a couple of weeks ago…
their share price has dropped to 60 cents… in less than two weeks…They will need to assess their position and try to find some cash from somewhere…. ie. by increasing their fees…
Much better options out there..
The Contrarian wrote:Whatever you do DON'T sign with RAMS….
They listed @ $2.50 on the share market a couple of weeks ago…
their share price has dropped to 60 cents… in less than two weeks…They will need to assess their position and try to find some cash from somewhere…. ie. by increasing their fees…
Much better options out there..
Why does the share price mean they need to find money? If shareholders shares are worth less how does that affect RAMS? Interested in your reasoning mate!
Rams is struggling to on sell its mortgages in the US market – these days a mortgage is like a commodity, it can be bought and sold.
Problem for them is they are struggling to re-finance about $5B worth so they probably will end up having to incur additional costs and these costs will end up having to be paid by its customers.
If I had a loan with Rams I'd probably be cautious but wouldn't pull out.
But if I was thinking of getting a loan with Rams I'd probably reconsider options.What I think is happening with RAMS is that the shareholders have lost confidence, hence the dive from $2.50 to just $0.86.
Therefore the company assets on their balance sheet is less attractive as it was a few weeks ago. RAMS will have to compete for a higher costs to attract more capital on the international market, hence these higher costs will be passed on to their clients in some ways to the loan market.
Can you imagine having just bought a RAMS franchise.
Richard Taylor | Australia's leading private lender
I wouldn't be signing up with RAMS normally, their exit fees are too high, though they can be good for low docs in some situations. Now I would be even more wary.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Interesting sentiments here. I have often been interested in the way some refer to 'securitised lenders' as if they are only for people that can't get bank loans from the big four banks. While it is indeed true, that some lenders, and indeed the lender in question will suffer some surprise reductions in their profitability for the year, the insinuation that a 'securitsed lender' (in this case Rams) is a 'quick lets panic risk' is very misleading. It appears that the banks today (among others) are tripping over each other to provide funds to Rams and other 'securitised lenders'. Why.? Thats right, because they ARE securitised – and thus mortgage insured – making the investment so appealing.
The market as a whole is spooked, and essentially what happens is when doubt and fear conquer ambition, then the answer is to get liquid…..the ASX and the world markets have just re-confimed that fact.
There are short term money markets, and long term ones – non bank lenders will simply be switching the market exposure and type in order to restructure, and stay competitive. If you want to see how this affects things, compare Macquaries stocks yesterday, to three months ago. What about Babcock and Brown over the last 3 or 4 weeks? Is that a reduction of over 40% ? Yes.
You will notice the 'internet only' wholesale type loans have increase by more than the 25 basis point interest rate rise, but in all fairness, if that is your thing is not 7.24% variable a bit more competitve than a bank?
Rather than 'panicking' over a mortgage or lender, the panic should be if you were a short term investor who was plaaning on selling shares yesterday to lock in some 'evaporated gains'……especially rams ones!
Balance folks!v8ghia wrote:Interesting sentiments here. I have often been interested in the way some refer to 'securitised lenders' as if they are only for people that can't get bank loans from the big four banks. While it is indeed true, that some lenders, and indeed the lender in question will suffer some surprise reductions in their profitability for the year, the insinuation that a 'securitsed lender' (in this case Rams) is a 'quick lets panic risk' is very misleading. It appears that the banks today (among others) are tripping over each other to provide funds to Rams and other 'securitised lenders'. Why.? Thats right, because they ARE securitised – and thus mortgage insured – making the investment so appealing.And this reliance on everything being mortgage insured is why investors should think twice before going to securitised lenders until they have to.
I say that RAMS just went into the Stock Market at the wrong time thats all, there comeing back up now along with alot of other companys. I might go with them as there the only ones they will accept me anyway with my credit rateing.
Hope that helps explain things a bit. If nothing else, a lot of people are learning about how the actual money marker works as a result of the US problem.
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