Some of you may have seen newspaper articles suggesting 100% loans and interest only loans may be a thing of the past. These two loan practices have been blamed, in part, for the cyclical nature of the housing market.
Typical newspaper article is here
For those who are interested the full RBA discussion paper is here
Now I am not a broker but my understanding is that 100% loans are long gone – the focus on interest only loans is 'interesting' (no pun intended).
Hi,
Yes 100% are a thing of the past! the disappeared about 4 years ago when the GCF started to take its affect. There have been many changes as a result of the GCF. The Interest Only idea is indeed interesting
I am a broker and there is now a much higher onus to demonstrate to ASIC that the loan you are giving someone is in their benefit. If someone wants an interest only loan for their owner occupied home, you need a very good reason to put this to a lender. Decreasing the repayments is not a good reason.
In terms of eliminating Interest only loans for Investment Properties? This would reduce the ability of people to afford the investment in the first place, thus decreasing demand, since we have a housing shortage in places like Sydney, we need as much construction activity as we can get. I'm not sure this would fly!
I agree that 100% loans are already a thing of the past. I haven't seen them in Australia anyway in recent times, nor have used them. I've always had to save up for deposits or at least tap into equity to invest.
I don't know, has anyone ever seen 100% loans in Australia?
Yeah they might have some problems with the no IO loans lol
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
Yes, 100% loans were common prior to the GCF they disappeared late 2008! I doubt they will ever be seen again, at least I think they are a bad idea!
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