Australian Mortgage Crunch

afr.com/real-estate/interestonly-borrowers-brace-for-mortgage-crunch-20180116-h0ixx3
>Queensland property investor Peter Button "grabbed the profit and ran" when his interest-only loan expired and he realised that refinancing would trigger a hefty increase in repayments.
>"I saw a refinancing issue coming over the horizon, it was easier to just get rid of it," said Mr Button who recently sold his two-bedroom apartment in the Brisbane CBD.
>But he's one of the lucky ones. Thousands of home owners face a looming financial crunch as $60 billion of interest-only loans written at the height of the property boom reset at higher rates and terms, over the next four years.

So is Australia literally the path towards another GFC? I mean these mortgages are very similar to the "adjustable rate mortgages" which contributed to the American housing bubble burst.

>Small Business Ombudsman Kate Carnell said the looming refinancing crunch could worry eight in 10 small business owners with loans secured against their homes.
>Kevin Young, the founder of Queensland's Property Club, one of the nation's biggest investment clubs, warned that more than 20,000 of its investors are struggling to afford mortgage repayments after the bank moved from interest only to principal and interest.

>Reserve Bank of Australia analysis shows new interest-only investor loans peaked around 64 per cent in 2014, or more than twice the number of interest-only owner occupied loans.
>That's about $111 billion worth of interest-only investor loans, or more than twice the value of investor loans taken out five years earlier, as major lenders battled for market share, DFA analysis shows.

This does not look good people.

Other urls found in this thread:

afr.com/real-estate/mortgage-delinquencies-rise-to-17-per-cent-up-from-from-15-per-cent-in-2016-moodys-20170615-gwrrox
medium.com/@matt_11659/matt-barrie-australias-economy-is-a-house-of-cards-6877adb3fb2f
investopedia.com/articles/markets/080916/how-negative-interest-rates-can-affect-consumers.asp
twitter.com/NSFWRedditGif

Oh and WA is already feeling the brunt of the storm by the way.
But hey, at least the government will treat us fairly tax wise!

afr.com/real-estate/mortgage-delinquencies-rise-to-17-per-cent-up-from-from-15-per-cent-in-2016-moodys-20170615-gwrrox

yeah, that's just the start of it.

medium.com/@matt_11659/matt-barrie-australias-economy-is-a-house-of-cards-6877adb3fb2f

Crucial parts:
>Crucially, the Australian household debt has now risen to a record high of 190 per cent of annual gross disposable income in the first quarter of the year, continuing an upward trend that has seen a 23 percentage point increase in the ratio since March 2013.

>But annual wage growth dropped to just 1.9 per cent in May 2017, the lowest on record, reflecting the transition in the economy away from higher paying mining-related jobs to lower paying jobs in the services sector.

>The combination of low wage growth and house price increases over the recent five-year boom has resulted in a deterioration in housing affordability, which Moody's says has increased the risks for less seasoned mortgage loans and RMBS backed by such loans.

>As a whole, the Australian economy has grown through a property bubble inflating on top of a mining bubble, built on top of a commodities bubble, driven by a China bubble.
>Unfortunately for Australia, that “lucky” free ride is just about to end.
>Societe Generale’s China economist Wei Yao said recently, “Chinese banks are looking down the barrel of a staggering $1.7 trillion—worth of losses”. Hyaman Capital’s Kyle Bass calls China a “$34 trillion experiment” which is “exploding”, where Chinese bank losses “could exceed 400% of the U.S. banking losses incurred during the subprime crisis”.

The numbers are fucking staggering. China fucked the planet and will doom us all.

we fucked ourselves by allwoing a literal human ant colony any influence over us whatsoever. you can only swallow the black pill and realise that western civilization is over. we are living through its decay.

my plan is to profit from crypto as much as possible and after all the capital flight from the dying system has taken place i will scoop up cheap land and property in the ashes.

>where Chinese bank losses “could exceed 400% of the U.S. banking losses incurred during the subprime crisis”.

Jesus... China already inflates it’s economic numbers. This is really bad

Soooo keep money in the bank and buy houses at bargain price within the next few years? yewwww

>What makes this especially dangerous is that it is unwinding in what increasingly looks like a global recession- perhaps even depression, in an environment where the U.S. Federal Reserve (1.25%), Bank of Canada (1.0%) and Bank of England (0.25%) interest rates are pretty much zero, and the European Central Bank (0.0%), Bank of Japan (-0.10%), and Central Banks of Sweden (-0.50%) and Switzerland (-0.75%) are at zero or negative interest rates.

What's the deal with negative interest by the way?

investopedia.com/articles/markets/080916/how-negative-interest-rates-can-affect-consumers.asp
>Fink pointed out that nonexistent interest rates make it impossible to generate a return on savings, thereby forcing workers to save larger proportions of their income.
That just sounds like it's gonna worsen this problem ay.
Anyone have the news on Aus interest rates? It's still 1.5% right?
Will that continue?

>Absent other factors, NIRP should encourage car loans and home mortgages. After all, cheaper interest payments mean you might be able to afford a nicer car or bigger home. Unfortunately, most Americans are already net debtors and need to pay down their existing loans, not take out more.
And by the sounds of it, Australia might be following that path..

>you can only swallow the black pill and realise that western civilization is over.
Not just the west if those numbers are correct. The entire global economy..