Just a friendly note to everyone that Four Corners have an interesting show Mon night on America's property market and the repercussions for the rest of the world.
Last month an unfamiliar expression appeared in the Australia media. A "subprime mortgage crisis" was unfolding in the United States. Homeowners across America were defaulting on loan payments and economists warned of major financial fallout occurring anywhere from Paris to Beijing to Melbourne. But why should a foreclosure in Cleveland, Ihio affect a hedge fund in Sydney?
As Four Corners reports, Australia, along with the rest of the world, is at risk of a virulent economic virus thanks to financial globalisation where everything is interconnected through a sophisticated form of pass the parcel. And even more alarmingly, no-one knows just how bad it might get.
Now I'm no doomdayer but I dont believe in burying my head in the sand. Perhaps after the show we could have some debate
Typical nonsence you would expect from 4 corners which is about the same as today tonight. The reality is that it has hit the American housing market. It is now difficult to get money from second tier lenders, however banks are still lending money, it is also likely that the US fed will cut rates by at least .25% but it could be as high as .50%. What is important is that it is a great time to invest in the United States. The market is in my opinion at its lowest point.
Nigel Kibel | Property Know How
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Must admit my opion for shows like four corners, (and don't get me started on today tonight ect) has really dropped over the last year or two – sensationalist exrement to put it pluntly, that unfortunately sends Joe Avergage into a 'it must be true I saw it on the telly' mentaility. The last few weeks as far as interest rates, the mortgage belt, move to PErth, move to rural Victoria, drive a mining truck, and how dare a lender evict someone form their 'home' that was 'only' $20,000 behind in their mortgage repayments ( wonder how 'wrappers' would go that long eh?) has put the nail in the coffin. As a sidepoint, can you imagine being 'interviewed' by their camera wielding kick the door down bacon heads regardless of whether you were innocent, guilty, or something in between? Look what happens when you get rid of Naomi……. Sorry Milly. nothing personal!
v8ghia wrote:( wonder how 'wrappers' would go that long eh?)What did you mean by this comment? I'm interested in wraps.
All,
I would strongly recommend forum members have a look at the 4 Corners story. It is not a question of "if" the sub-prime issue in the US will affect the Oz market – it already has. Investors here have benefited from the globalisation of credit markets in that has allowed the second tier and securitised lenders to push the price of borrowings down and to drag the major Bank's along for the ride. The re-pricing of credit globally (driven out of the US sub-prime issue) is putting the squeeze on both the availability and cost of credit which, over the medium term, will increase borrowing costs.
By way of example, Banks have been able to get wholesale funds (which they, in turn, lend to the rest of us) and about .10% over the official cash rate. Last week, the 90 day bill rate was a whopping .50% over the cash rate. When the cost of the raw materials go up, the Bank's will pass it on by hook or by crook.
As far as investors go, I'll make the call that Lo Doc loans will permanently reprice at something like .50% above where they are now, as the international appetite for that business is gone for the foreseeable future.
Finally, if you don't think the contagion can spread outside of the US, take a butchers hook at what is happening to Northern Rock in the UK….. http://business.scotsman.com/index.cfm?id=1485112007
DraconisV wrote:[What did you mean by this comment? I'm interested in wraps.Hi Drac. Just a bit tongue in cheek of me – as this is somthing 'wrappers' have been drilled about on similar shows in the past – evicting non paying 'buyers/borrowers.'. I was alluding to the stupidity (sensationalism) of making it apear unreasonable to foreclose on someone who is 20k behind in repayments. (a fact that was merely breezed over) Even at $500 per week, work out how long it is since they have made a payment and I cannot imagine anyone (let alone someone providing vendor finance) tolerating this type of loan arrears/conduct regadless of cicrcumstances.
All the best.
just watched the show and am a bit confused ,i want to sell one of my ips now ,but i also want to go to america and buy more there …..
how cool was that guys two acre house on the river ?( about to be forclosed on …)
you have to question the logic of retiring and having a big mortgage ???? i got the impression his equity was zip
am i wrong or is the thing that is fuelling "our " market the mining money from china and not cheap credit and easy finance ?
i always have to jump through hoops
any thoughts ?just watched the show and am a bit confused ,i want to sell one of my ips now ,but i also want to go to america and buy more there …..
how cool was that guys two acre house on the river ?( about to be forclosed on …)
you have to question the logic of retiring and having a big mortgage ???? i got the impression his equity was zip
am i wrong or is the thing that is fuelling "our " market the mining money from china and not cheap credit and easy finance ?
i always have to jump through hoops
any thoughts ?An investor I know in Florida reckons that it is a buyers market with the prices having dropped as much as they have especaily waterfront plenty of motivated vendors
http://mfr.mlxchange.com/Pub/EmailView.asp?r=1494266216&s=MFR&t=MFR
Must admit I am glad I am out of the WNY market after seeing those vacant houses in Cleveland
suavemechanic wrote:just watched the show and am a bit confused ,i want to sell one of my ips now ,but i also want to go to america and buy more there …..
how cool was that guys two acre house on the river ?( about to be forclosed on …)
you have to question the logic of retiring and having a big mortgage ???? i got the impression his equity was zip
am i wrong or is the thing that is fuelling "our " market the mining money from china and not cheap credit and easy finance ?
i always have to jump through hoops
any thoughts ?If you take anything out of the 4 Corners story, buy Robert Shiller's book (he was they Yale professor talking about the "real estate goes up by 10% year" fallacy. I've always figured that for every book telling you easy it is to make money through whatever mechanism, you should by one explaining how easy it has been over time to lose your shirt. Balance in all things!
BTW< we're selling stuff to China because they're selling stuff elsewhere. With the US their single largest market, a significant slow-down in the US economy will have a flow on effect here.
Another point of view is the demand at the foreclosure auctions. One mans loss is another mans gain.These are people setting themselves up for the next upturn.
have spent the day digesting the show and the real crime is wrapping up and on onselling all that debt as "property backed loans" when the owners had no equity and no job ! when things get tough there is no reason to stay
amazing what people will do for granite bench tops (anything but maths !)
sadly i have lost my shirt a few times in a variety of ways …….not sure a book on it would be happy reading !.but i take your point .
this makes me want to hang on to my property in spite of suggestions about the market now or next week
its for in twenty years when i retire anyway
in which case we should all be yelling " ye har the great sale is coming ! "
cheers
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