Hello all this is not a "negative" post … thought I would get that out of the way b4 I started.
Yes the interest rates are coming down but what does that really mean … does it give the right for agents and property marketing companies to say BUY ? … IMHO no it doesn't.
The major banks are making it very difficult for burrowers and are applying pressure on reputable valuers to get it right or else. Some banks are that concerned with some areas of the market that they have shut down lending in some of their banking sectors.
If you read some of the posts here many people are finding it difficult to borrow money because the banks criteria has changed dramatically in the last 6 months.
Folks the market has changed !! … When Dave and Steve became local heroes they bought and sold x properties in under 3 years but is that possible now is the question for many people. What they did was to give hope to other investors that it is possible to go from zero to hero and I commend them for that because many other people on this forum have benefited from their exposure …. but now that the markets have changed what do we do today that was different from when Dave and Steve rock and rolled.
Firstly and most importantly people need to be able to tell the difference between an "asset" and a "liability" and leave emotions completely out of the way. If the numbers don't work don't rework the numbers.
Two great books to re-read immediately are Rich Dad Poor Dad and the Richest man in Babylon … for many powerful messages.
Secondly I believe that if you/me are buying now we need to get the basics absolutely correct. Local growth projections, Bus Stop, Train Station, Shopping center, Location, growth statistics, etc … for those who want to check I have just secured a property 50/50 with a friend of mine for knock down in Warrawee in Sydney at 16 Mildred street $700k it will rent for 6 months at 550.00 per week, then we will put a 5 bedroom 3 bathroom (marble floors) granite kitchen,home office, media room, all up package "Clarendon Homes" 400k max and it will resell for around $1.5 million dollars which is an up sell of 400k profit in 18 months possibly more if the market improves. Oh the local bus which goes to the shops and train station stops at the front door.
I am not showing off here, I am buying, but only after we have done "extreme" due diligence and market analysis which is my point of this post … don't just buy any property buy the right property. There are many other factors that are making it confusing at the moment for big business and the banking sector. Petrol prices, cost of living, cost of civil works, cost of building, smaller margins for developers, over seas markets. Just look at last weeks collapse of the Raptis group of over 700 million, to prove this point.
Bankruptcies and liquidations are now running at 185 per week … don't be enticed by falling rates but be inticed to perform extreem due dilligence and intelligence when investing and borrowing money, because your future cash results will depend solely on the quality of the decission you make today.
D
wealth4life.com wrote:The major banks are making it very difficult for burrowers and are applying pressure on reputable valuers to get it right or else. Some banks are that concerned with some areas of the market that they have shut down lending in some of their banking sectors.
What country are we talking about here ? I sniffed around CBA and NAB and is business as normal, unless of course you are/have been bankrupt or have a stained credit record. Even then its not that difficult.
Quote:I am not showing off here, I am buying, but only after we have done "extreme" due diligence and market analysis which is my point of this post … don't just buy any property buy the right property. There are many other factors that are making it confusing at the moment for big business and the banking sector. Petrol prices, cost of living, cost of civil works, cost of building, smaller margins for developers, over seas markets.
How did you chose property before you found out that you had to research and do ""extreme" due diligence and market analysis" , dart board ?
wealth 4 life; congrats mate. it is really good to hear someone who is doing well or who has had a win. it is really encouraging.
my sale went unconditional last friday. the buyers hadn't wanted a subject to finance clause in the contract but their bank insisted. today i learned that they were knocked back for finance. they were certain they would get their loan as they had a property which settled (by all accounts on 12th sept). so now my sale has fallen through….
didn't know that they have 3 days after the unconditional date to confirm finance…..thanks
graceharb wrote:wealth4life.com wrote:The major banks are making it very difficult for burrowers and are applying pressure on reputable valuers to get it right or else. Some banks are that concerned with some areas of the market that they have shut down lending in some of their banking sectors.
What country are we talking about here ? I sniffed around CBA and NAB and is business as normal, unless of course you are/have been bankrupt or have a stained credit record. Even then its not that difficult.
I agree with you Harb, I am not so sure that it is so bad. I went with a mate to the bank last Friday to look at how much he can borrow for his first investment property. He is a former bankrupt and recently had a $10K credit card bill he just rolled over into his existing home mortgage – so he's not your perfect customer. Within 45 minutes, he had pre-approval from CBA for $250K. By the sounds of it, he could've borrowed more if he was prepared to pay LMI.
Oh dear oh dear boys !!
Keep an eye on the papers over the next few weeks to see what is happening in the local Australian finance markets including banks and sub lenders.
When you look outside your local banks you will gain a better understanding of the true market place. Harb I can't comment on yr friend but at least he had an asset with equity and obviously income and thats why the bank gave him a redraw of 250k – how would he go being an x bankrupt with no house and a good income I wonder. but thats only speculation isn't it. By the way how old are you?
D
Had a visit with the bank thursday. They are throwing money at me. No real change there at all.
wealth4life.com wrote:Keep an eye on the papers over the next few weeks to see what is happening in the local Australian finance markets including banks and sub lenders.Why , you bought a crystal ball from BigW ? Me too.
Mine shows 0.5% RBA cut next month and and banks rushing to be the first to pass it on to their customers. They may be unwilling to lend to each other but only because they'd rather lend it to home buyers, preferably to another bank's home buyers.Quote:Harb I can't comment on yr friend but at least he had an asset with equity and obviously income and thats why the bank gave him a redraw of 250k – how would he go being an x bankrupt with no house and a good income I wonder. but thats only speculation isn't it. By the way how old are you?I think you are getting confused with B_F's post here, I'm an evil specufestor – I have no friends.
But yes, I too know of couple of bankrupts and one of them twice and with a gambling problem. He has no assets and still managed to score a few major credit cards with $25k+ limits on each with just a couple of payslips of good income. With the same payslips he could walk into any major bank and would have no problem walking out with a $650k home loan if he wanted one. Unlike a solid asset that appreciates in value money is either going around or is going down in value. Having money locked up in the safe is not an option, the banks have no choice but to lend it or lose it to inflation. Its that simple.
45ish, why ?Have to agree with Wealth lending markets have certainly tightened up especially in the self employed / lodoc / credit imparied arenas and even the full doc market with certain lenders.
LVR's have reduced and discounts disappeared.
Where we used to be able to get 0.8 – 1% discount for clients off the standard variable rate with a large enough loan these sorts of rates have completely disappeared.
Most of the majors have withdrawn their 0.7% discount off their lodoc product range and in fact Pro Packs could be a thing of the past in the next 6-12 months.
Richard Taylor | Australia's leading private lender
devo76 wrote:Had a visit with the bank thursday. They are throwing money at me. No real change there at all.Did you catch it? Perhaps you have enough working years left to make your debt worthwhile? Or perhaps you have some asset that aren't depreciating?
harb wrote:45ish, why ?Perhaps wealth4life is cruising the forums for a new man:) It could be a good partnership, she could temper your downturn denial and you could boost her negative outlook.
Credit is tightening up – not by the major banks changing their practices yet but by smaller banks and non-bank lenders undergoing change. Our govt solution is a mini version of the American one – inject cash… very foolish.
http://www.news.com.au/business/story/0,27753,24406867-31037,00.html
And often when they are warning us it is not something
http://www.news.com.au/business/story/0,27753,24405439-31037,00.html
that is exactly what it is. After the stock market crash of 1929 governments injected cash and the end result, as evidenced by historical research, was to prolong the downturn effect.
We have already lost 3 years of capital gains
http://www.news.com.au/business/money/story/0,25479,24403901-5017313,00.html
I was only predicting another 1 or 2 (2004 house prices again) and hope it is not worse but the situation looks like it is setting itself up for something bigger – perhaps the 30's will not be thought of as so bad after this.
My bet on the reason why Rudd is so adament that the US taxpayers bail their own markets out is that our governemnt has a very real inkling of how bad it could all hit these shores.
We drank way too deeply from the money well, it seems. Time for mud and sand.
ummester wrote:devo76 wrote:and you could boost her negative outlook.She's not like that anymore, you obviously missed the first line in her post,
Quote:Hello all this is not a "negative" post … thought I would get that out of the way b4 I started.A couple more rate cuts before the end of the year and she'll come around.
Quote:Why is it foolish, did it upset your plans in any way ? $4 billion is only the start, probably just a quarter of the total amount they will inject this year.
Quote:I was only predicting another 1 or 2 (2004 house prices again) and hope it is not worse but the situation looks like it is setting itself up for something bigger – perhaps the 30's will not be thought of as so bad after this.Looks to me like you are still in denial. A few months ago I was predicting a couple of small interest rate cuts by X-mas, mid 5s by middle of next year and the start of the recovery sometimes early 2009 but looks like I was wrong as well. I was a little too bearish at the time.
Harb,
it's foolish because it draws on public funds which leaves less for public assistance when the true force of the financial instability hits home. Do some reading about the depression.
Mid 5's – you are funny:) The big banks still have not made fully good on the last RBA cut.
ummester wrote:Do some reading about the depression.
I tried but had to give up after the first page, it was just too depressing.
Quote:Mid 5's – you are funny:)
Mid 5s RBA rate not the variable rate but it could even get to that by X-mas 2009 if things are not picking up over the next 9 months. Someone else told me it was funny when during last May-June while most of the "expert economists" were calling a couple more rate rises by X-mas I suggested the possibility of a couple of rate cuts. Bloody hilarious.
harb wrote:Mid 5s RBA rate not the variable rate but it could even get to that by X-mas 2009 if things are not picking up over the next 9 months. Someone else told me it was funny when during last May-June while most of the "expert economists" were calling a couple more rate rises by X-mas I suggested the possibility of a couple of rate cuts. Bloody hilarious.RBA rates will go down. Mortgage interest rates will not.
You borrow direct from the RBA do you?
ummester wrote:harb wrote:Mid 5s RBA rate not the variable rate but it could even get to that by X-mas 2009 if things are not picking up over the next 9 months. Someone else told me it was funny when during last May-June while most of the "expert economists" were calling a couple more rate rises by X-mas I suggested the possibility of a couple of rate cuts. Bloody hilarious.RBA rates will go down. Mortgage interest rates will not.
You borrow direct from the RBA do you?
Not trying to pick your post but many negative nellies on a certain other anti investing forums also stated that no way would the major banks drop there rates when the RBA made there first move down. YET THEY DID. Now they say that there is no chance of them lowering again. They have all the facts in the world to back up these claims but the real world proved them wrong. I believe they will continue to lower rates. maybe not the same day as the RBA but they will go down.
Fixed rates are going down but I thought only 2 of the big 4 had so far come good on the promise to lower variable rates? If they have all lowered variable then i stand corrected.
ummester wrote:Fixed rates are going down but I thought only 2 of the big 4 had so far come good on the promise to lower variable rates? If they have all lowered variable then i stand corrected.
Even RHG lowered it, didn't do a song and dance about it like the big banks but they did lower it.
Talked with a client broker last night said the clients who have 5 year loans rolling over end of this year up to mid 2009 are now checking out propsects.
She is still getting funds but the problem has been that the valuations are "15%" less than that the client has calculated on..
so some with high debt portfolios or others who are hoping to fold some debt costs into the loan are in a interesting situation
18 months more pain before the gain
Perhaps but I predict/no guarantee that in 18months there will be a host of seminars and books about how you can make a killing in Real Estate.
The catch will be it will be all strories about what investors are doing right now in this market and how they profited.
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
Hey Harb,
This is what I've been talking about with intrest rates…
http://www.news.com.au/business/money/story/0,25479,24434215-5016110,00.html
ummester wrote:Hey Harb,This is what I've been talking about with intrest rates…
http://www.news.com.au/business/money/story/0,25479,24434215-5016110,00.html
So you don't mind believe them but only when it suits you ?
How about this then,
ANZ may pass on some rate cuts,
http://www.news.com.au/business/story/0,27753,24435919-31037,00.html
I guess we'll have to sit back and enjoy the show.
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