Mortgage standards panic seeps into MSM

Via a panicky Domainfax and following this week’s WBC tightening:

Tom Crowley, National Australia Bank’s acting general manager of home lending, said the bank was collecting “granular” details of a customer’s expenses, and it was keen to work with regulators and other lenders to improve their assessments of borrowers’ finances.

…Managing director of mortgage broker Homeloanexperts.com.au, Otto Dargan, said that in the past two weeks, more banks were seeking greater detail about peoples’ expenses.

…The extra scrutiny had not necessarily reduced how much a customer could borrow, he said, but it had made the process of getting a home loan more complex.

Some analysts belive the trend will further put the brakes on housing credit growth, and Mr Dargan said anyone bidding on a property at an auction without pre-approval of their financing was taking an “enormous risk.”

If true, house price falls will steepen within three months.

Comments

  1. ITS TRUE
    PUT YOUR CRASH HELMUT ON
    I’d be surprised if prices weren’t down 15/20% by end of next year
    The SOUP NAZI is head of credit at Westpac
    No loans for u

      • Sadly I am with Peachy on this 1, I reckon there will be a short term stimulus / bonanza in the next budget. It won’t make much difference but it will have some more window dressing.. The idiots think the stamp duty concessions are helping rather than pumping up the low end (or maybe they know and that’s why they are celebrating them)? They must know..

      • Peachy
        It’s like saying you’ll jump out of a plane and go up
        No rescue this time
        Nothing will stop this


      • Agreed, still some Budget ammo left, but not much…

        How will needing to bail out the NSW government when stamp duty dries up effect the Commonwealth budget?

      • The RBA estimates that as much as $480 billion in IO mortgages will convert to P&I loans over the next 4 years, ratcheting up the repayment burden on around 30 per cent of outstanding loans by between 30-40 % on those loans,
        With around $120 billion switching to principal and interest loans from interest-only a year between 2018 and 2021, there is also concern that the shift will weigh on house prices, already declining
        “Given the multitude of changes in institutional structures, investors’ asset holdings and market dynamics, it remains uncertain how different classes of investors will be affected by, and respond to, asset price falls.
        WW I’ll tell you what is not uncertain, when you lose your job, you cant make any repayments.

      • boomengineeringMEMBER

        WW just calculated that I must have had about 10k idea’s and inventions in my life some working some just idea’s some duds Have some old one’s you may be interested in to reduce drag on boats and lesser extent boards (not just lamina layer either)
        I just throw my inventions in the bin these days after told so called invention helpers who didn’t think one idea was good but then saw it on TV later. To make things worse it wasn’t as good with less features as well.

      • IN Southwest Syd they were dropping until the end of the year. Then prices stalled and even went up a bit in the last 2 months (at least asking price). What I noticed is if weekly price drops are around -0.23% or more, drops are more widely spread with only very few areas not being impacted. Anything below -0.2% indicates only localised weakness.

      • truthisfashionable

        @Boom

        I actually really like Jacob’s idea of automating tyre repair and maintenance. It was an offhand remark but thinking it through and thinking of the existing robots, I don’t think it would be as hard as other things to automate.

        Drive in – jacks lift the car up, couple of robots take the wheels off, balances them and moves their position front to back.

        You could even extend it so that you order your new tyres online, you roll up to the drive in, number plate is read, order is looked up, replacement tyres picked then, jacks lift the car up, couple of robots take the wheels off, takes the tyres off, puts new ones onto your wheels, balances them, puts them on the car and off you go. Credit card is billed once completed.

        It’s only a wheel alignment that would be really difficult to automate as the adjustments for each car would be in different locations.

      • boomengineeringMEMBER

        Truth, so many thing are going to change, but most garages don’t do wheel alignment,s they just bill you for it because the first curb or pot hole you hit void’s any proof.

      • Boom let’s build robots that mow lawns! They will need to have some kind of safety features to stop running if children or pets go near them. Image recognition should be able to do that. It will also need to map out the area it’s mowing and flag problems in surface like stumps, rocks etc.. but once it’s built a map it should be able to be instructed on where to dump the grass when catcher is full.

        I hate mowing lawns and would definitely buy 1 myself.

      • @boomengineering

        Would you believe it they tried to bill me for wheel alignment on a live axle. I said – so – what did you do? did you bend the axle to “straighten” it?

        Bunch of Dipswitchians!

      • True. We have been saying 18 months to two years for the last ten.

        But its starting to look like its actually happening. The horrible irony is that when the correction finally happens mortgage standards will be so tight that first home owners still wont be able to buy a home, leaving them in the same lousy position they are currently in.

      • Bubbley, that is always the case. When the market is in a fear mode, lenders refuse to lend out of fear of not getting the capital back. The result is they are only willing to lend to those that have impeccable credit ratings who by definition do not need to borrow money.

    • Are you in a hurry? Is there any need to panic buy? I know I’m tempted when I see something I can afford, but why rush? It’s not like prices are going up 10% p.a YoY..anymore. 🙂 If they take off again and go to the moon I’ll buy feck it. But I just don’t see anymore rainbows about to smack us up the arse at this stage.

      • Gav I think a lot of FHB don’t look at it this way, I have a mate who just bought, a colleague who just bought (although has a couple of properties), and my boss who is thinking of buying now that it’s “cooled” (who has a sizable deposit).
        All the investor mates are quiet
        My sister is regretting buying an off the plan apartment in VIC that has not started, over two years now
        Point being, different market, FHB and owner occupiers, not investors

      • I’d wait you waited this long. All they’ve done is cut off interest only loans and already everyones in a panic. What happens when unemployment rises properly like it did in Europe/US during the next world financial event? World interest rates keep rising slowly too? What I can’t explain is whats caused the recent jump in under 1mil houses in Melbourne recently but there is still a lot of high paid construction work going on atm

      • Gav surely you’ve got some of it offshore now. AUD is a sitting duck now, could double that deposit with some luck.

      • If you live in Sydney and have a family, a decent house (not a nice house!) in a suburb with OK access to transport and good schools will run you around $700 +/- per week. My partner and I managed to get jobs paying the same in regional Victoria where we could buy a house for $500 a week, and interest rises would only bring payments back to what our old rent was. When that much rent is dead money anyway, the price rises or fall don’t matter so much, since we’d be chucking away roughly $40,000 per annum just to live as renters in Sydney. FHBs are operating in very different circumstances/according to different logic.

      • Agree, that’s why I’m also looking in Victoria. I rent at around $650 P/week in Sydney. Over it.

    • I think that tanker has been turning for months, some FHB stimulus offsetting scuttling Chinese and retreating investors but with interest rates this close to zero and stuff all wage growth I can’t see the government arresting the current slide.

      • I’m inclined to think that after 30 weeks of Sydney RE falling, and no end in sight, if they coulda, they woulda by now.

      • SoMPLSBoyMEMBER

        @ Robert
        Most of the folks ‘out there’ are still in the mindset of how things have always been for 15-20 years where property prices rise with the consistency of long established weather patterns. And this includes the pollies and policymakers., too.
        It’s a pretty small minority who have their faces pressed into the chain link fences who are observing what’s happening on the other side and most here at MB are these ‘sentinels’. As usual, the early reports from the sentinels are normally ignored or dismissed by those who can’t/ won’t acknowledge they might be hurt; especially if they have been convinced that all risk and downside has been eliminated which seems to be the most common irrational belief wrt Oz property.

      • @SomPL – I think the logical conclusion from your comment is that policymakers won’t believe it’s happening until it’s waaayyy too late to stop it. You could be right – but the outcome isn’t very different from my hypothesis that they’ve already run out of ammunition they’re prepared to use.

      • SoMPLSBoyMEMBER

        @ Rob
        Well phrased.
        Many have chosen to not be prepared and hence are failing to recognize the peril.

      • @ Rob and Sboy – Remember the guy who predicted the GFC? He was derided, scorned and given the dismissive title of Dr Doom because thats the easiest way to discredit those who oppose the status quo.

        Being on MB feels a bit the same. A small voice of reason amongst the irrationality of debt addicts.

    • A friend with decades of RE experience enjoyed the 80’s boom and then describes the early 90’s collapse as ‘it’s as if someone just turned off the lights’ . We’re not there yet, but ..

  2. Mr Dargan said anyone bidding on a property at an auction without pre-approval of their financing was taking an “enormous risk.”

    There. Fixed that for him.

    Anybody who buys into a hugely expensive and highly illiquid market that is clearly dropping isn’t just taking a risk, they’re a little bit mental

  3. From a Director of a Loan Company on Linkedin: “Borrowing crackdown could mean an $80k income makes you eligible for a $200k loan – Last time I checked I lived in a democracy, freedom of choice, freedom of speech. I can choose if I want to eat two minute noodles to buy my family a home. I certainly don’t require a government that fails to live within its own means every year telling me how to budget. ” https://www.linkedin.com/in/gregmalonegandh/detail/recent-activity/
    So much gold in here!

    • astrolinMEMBER

      Exactly, a democracy where the democratically elected government can bail out a bank in case it goes insolvent through poor lending standards. Viva La Democracy


    • “Borrowing crackdown could mean an $80k income makes you eligible for a $200k loan

      Fantastic – median house price of $300k here we come.
      Makes you wonder – how much would a house cost if there was no such thing as a mortgage?

      • Read Love On the Dole and watch It’s a Wonderful Life. Worse things than mortgages. As always we just have too much of a good thing.

      • boomengineeringMEMBER

        Robert, been saying that for years, falling on deaf ears,If no usury/money lending, house price would be about deposit price except for new builds which would gradually depreciate to land price level similar to that when buying a new car.

      • I’m not totally against credit – but I’d be a bit more comfortable with the residential mortgage market if a typical mortgage was limited to five years, such that a young couple could get married, and have the loan paid off about the time they had their first kid.
        That couldn’t happen without far lower house prices though.

        In the mean time, I suspect that as falling house prices force lenders to make more pessimistic forecasts of losses given default, credit conditions will continue to tighten on the way down, forcing prices down further.

      • Good grief boom…

        Credit has been with humanity right from the start, before any contrived notion of what most think as money today. In fact the majority of human trade has been via credit, so called bimetallism is just a form of HPM, tho history shows that it always has a baked in massive social event e.g. wars and social destruction.

        Hint moeny is always a secondary or more effect of more dominate factors.

    • Mining BoganMEMBER

      I like the bit where government interference in a ‘free’ market is only a bad thing when it doesn’t suit your outlook on matters free.

      *waves at everyone*

    • re: the comments to this guy’s brainfart – isn’t funny how addiction facilitators such as drug dealers, pokie operators and money lenders are always such staunch supporters of personal responsibility?

    • We demand freedom and democracy when it is profitable.

      We demand socialism when we want excellent government service.

      We demand communism when we want to shut people of opposite opinion up.

    • He’s basically said that house prices are un-supportable without lenders taking a reckless disregard as to whether their borrowers can afford to pay the loan back.
      Gold.

  4. None of it matters if the don’t properly validate income. Lying on income is the problem. Everyone is competing with liars and in Australia the greater liar wins. We are under an illusion if we truly believe Australians work harder than anyone in the world, but we definitely borrow harder than anyone in the world.

      • Correct. System suits everyone – banks, govt – everyone except the borrower that is. It’s not a coincidence.

        “Somebody’s got you on that treadmill mate” – Oils

  5. Guy at work just bought house and land @ Box Hill , Sydney for roughly 780K. He’s 56 and the house hasn’t even begun to be built. So let’s say it’s 1 year from completing. He’ll be 57 with maybe 10 years of working life left yet the banks lent him the money! I’ve told him he’s mad but I say nothing now. Just 1 example of the madness. The government must be pooing their knicker bokers. But will have a plan to look after the BB and screw the young some more no doubt.
    Tired of waiting!

      • Mining BoganMEMBER

        Oh my…

        Hopefully the kids have grown up and left home so they won’t hear dad sobbing himself to sleep every night.

      • Stone the CrowsMEMBER

        Box Hill….lol, shitty boxes everywhere !

        Little boxes on the hillside
        Little boxes made of ticky-tacky
        Little boxes on the hillside
        Little boxes all the same
        There’s a pink one and a green one
        And a blue one and a yellow one
        And they’re all made out of ticky-tacky
        And they all look just the same

    • Has the bank actually given him the money? Or has he paid a deposit to the developer and the bank hasn’t provided the loan to him yet? If so, could be in some strife once the final bill comes.

      • He’s got the money from the bank, paid for the land already.
        What could go wrong? 😅
        Nice guy though. Just believes the hype.

  6. Five signs of a crash to look for in the MSM are:

    1. The comments section following booster real estate “journalism” will be removed without fanfare or explanation;

    2. ‘Closed for comments’ will appear with lightning speed on “real estate news” and “economic journalism” in UnFairFax.

    3. As with the Pascoe swan song on mass immigration – “no comments” will be taken will become standard fare – basically saying “stuff you, we can trot out complete crap as there is nothing you can do about it – so there”

    4. “economists” and “real estate experts” will predict a modest downturn, but predict a long term gain beginning in 2020, 2021, 2022….. when everything will smell like roses again.

    5. The Bridget Jones of UnFairfax (Jessica Brat Irvine) will write a few stone heart lifting pieces to convince young people that this is life folks. She’ll then bugger off to one of Rupert’s rags and try for a TV spot with other obnoxious generation traitors – just wait and see.

    Idiots

      • They already did – and in response, Sydney house prices fell for 30 weeks and counting, and Melbourne house prices joined in.

      • boomengineeringMEMBER

        A few of us old guys have seen it all before,bcnich is correct even optimistic no gov’t is big enough to stop it without a shear chaos result and as bad as they are that too costly a price.

      • Yep, the pin up girl of cultural Marxism (Liz Allen) who calls herself a “demographer” (when she is not even in the demography department at ANU) will be trotted out for some condescending analysis that this is all in the name of diversity that we will have to swallow because her lobby group says so.

        Liz Allen and Anus Bollocks are well on their way to becoming the most hated people in the country. What brass these people have – along with their coterie of emasculated and brain dead far left spruikers (Andrew O’Keefe anyone?) who have set up the “Immigration Council” within the ANU domain with “discover diversity” as their banner.

        Honestly, these people make me sick. They are a transparent lobby group and deeply evil because they are undermining the democratic process by using business funds to drive population policy for the benefit of their own industry. People have go to wake up to how evil these types are.

        If mass immigration ate into business profits does anyone really believe that any of this rubbish would even cross their minds? It’s all about the bottom line and people like Liz Allen are just useful idiots.

        http://migrationcouncil.org.au/about-us/

      • Clive I think you should read Marx and understand what Cultural Marxist means, its not how you use it. Its more about the elites [tm] owning knowlage.

        E.g. are you suggesting Lily is a cultural elite in the same class as say Hayek et al.

      • putin did it

        Interesting point, but I’m using the term as Jordan Petterson might:

        https://www.youtube.com/watch?v=wLoG9zBvvLQ

        although ‘Social Marxism’ has also been used and these terms are not chiseled in stone – I won’t die in a ditch defending my use of the term.

        I’m referring to those who believe that the struggle of any “oppressed” minority is akin to a class struggle against the ruling elite – in that just being a minority (any minority) makes you oppressed. This is the core idea of identity politics. If you read Liz Allen’s work (if you can call it that) it is classic ‘social justice warrior’ stuff. White middle aged and western men oppress everyone not because they have been historically in the majority in Anglophone countries (or built western countries), but because this is a conspiracy. To Liz they are the enemy that by social engineering (mass immigration) she is seeking to correct. Her diversity rantings and political agenda is to immunise Australia against itself – because all white people (especially men) are xenophobes and part of the patriarchy. This is what I call social Marxism not because I reject all of what Marx wrote about in terms of the plight of the working class and capitalism, but because the premise is of the same as his ‘struggle’ against an oppressor. Marxism lost out in universities and has reinvented itself in the post-modernist image.

        I am not saying that Marx promoted this – not at all. It is a corruption of class struggle ideology and revolutionary thinking. As I said, Liz Allen is just a useful and deluded idiot helping the property lobby make a killing – while killing our society. Anyone who listen to this transparent and loopy shrill on 4 Corners and was not utterly nauseated should find fish sauce on ice cream no problem at all – in the name of diversity.

        People like Anus Bollocks of the property lobby are just using this bullshit artist’s ideology as a cynical distraction. Old Anus is to the right of Attila the Hun – yet he uses a deranged far left social justice fruitcake like Liz Allen to say the sort of spin that he would never get away with. Because she believes it – he believes in money.

  7. TailorTrashMEMBER

    Anyone know if Joe get a better job Hockey off loaded his place in Hunters Hill ?………….if not he must be on the phone to Scomo to
    keep the wheels on the banking / mortgage disaster untill he has done so .

  8. Haha… as if I can be fecked telling a bank manager how many times I scratch my arse on Sundays to get a mortgage. If they need more data to issue home loans they should just buy the data from facebook!

    • LOL, I see you Checked into McDonald’s 3x last week and spent a total of $60 on McNuggets and Coke. Would you say that’s a regular spending pattern for you?

      • Oh, I see you are buying left handed mice at Office Works with alarming frequency, but I don’t see any corresponding ‘adult’ website subscription costs …

  9. RBA flags dangers of $480b in interest-only loan resets over the next four years
    http://www.afr.com/news/economy/rba-flags-dangers-of-480b-in-interestonly-loan-resets-over-the-next-four-years-20180413-h0yppv
    [Almost half a trillion dollars in interest-only mortgages will convert to principal and interest loans over the next four years – jacking up monthly repayments for almost 1.5 million borrowers by as much as 40 per cent and creating a fresh threat to house prices.

    In a sign of unease within the Reserve Bank of Australia about an unprecedented situation, officials for the first time published figures showing that around 30 per cent of all outstanding national mortgage debt will be subject to the reset, which has been likened to the wave of adjustable-rate loans that triggered the 2008 US subprime crisis.]

    • cycledseasoning

      Easily fixed. Just allow the banks to roll them into new interest only loans.

      Central Banker types will almost certainly choose that option versus overseeing the disintegration of bank balance sheets.

      • Not sure if that’s a bad thing…? On the 1 hand I consider myself a libertarian and I support the free market. But I just don’t see many free markets about these days. They are all rigged.

  10. https://www.perthnow.com.au/news/perth/city-of-fremantle-says-wa-can-save-30-billion-over-30-years-if-it-cuts-down-on-urban-sprawl-ng-b88805210z
    A target of 100 per cent would save the State $30 billion by 2050, Fremantle says in its submission to the committee looking into the development of cities.

    they think 100% density target is a good thing.
    But the quickest cheapest solution is never discussed is it.
    Cut imigration to zero for the next 15 years then limit it to the previous average.
    So easy.
    Stupid to not even be raised.

    • I have money in US equities and because I lived in Ireland I have an Irish bank account with Euros. Several banks here however allow you to place your money in foreign denominated currencies. But I am worried about how secure the big 4 are..

    • Also consider ETF’s like Betashares ‘USD’ that trade on the ASX. I use it to get my super funds out of AUD and into foreign ‘cash’. there are a few others. Setting up a foreign bank account is hard these days. HSBC is good at it, but i expect you need a genuine reason. They recently closed my jersey accounts.

    • Tassie TomMEMBER

      I’ve got money in unhedged international managed funds, such as Vanguard index international shares (unhedged).

      Not perfect – if the US sharemarket goes down at the same time the Aussie dollar goes down, then my investments won’t go up, but they won’t go down as much as they would if they were Australian.

      If the Aussie dollar gets down to about US 45 cents, I’ll swap it into the hedged version of the same fund. All you need to do is make this swap 4 times in a lifetime (twice unheeding at 90 cents, twice hedging at 45 cents) and you’ve quadrupled the value of the fund compared with if you just held the fund.

  11. : NEW ZEALAND: HOUSING MINISTER PHIL TWYFORD’S UNNECESSARY AND DAMAGING CONFUSION …

    … FOCUS ON THE FRINGES … AND THE REST WILL TAKE CARE OF ITSELF …

    … Do watch IN FULL this superb interview of New Zealand Housing Minister Phil Twyford by Newstalk ZB Christchurch’s Chris Lynch yesterday (Friday) … where still … sadly … the Minister is failing to FOCUS ON THE FRINGES … so ALL FORMS of development become increasingly affordable … ESSENTIAL VIEWING …

    https://www.facebook.com/chrislynchzb/videos/1768362633223469/

    … National Opposition Housing Spokesperson Judith Collins outlines what Prime Minister Jacinda Ardern REALLY THINKS of the Unitec development debacle …

    Governments backflipping worthy of gold – Judith Collins – NZ National Party

    http://www.scoop.co.nz/stories/PA1804/S00123/government-back-flipping-worthy-of-gold.htm

    The Prime Minister and her Housing Minister have been left red-faced and scrambling to explain critical statements Ms Ardern made when in Opposition about plans to build thousands of houses on the Unitec Site in Auckland.

    “When reminded of Jacinda Ardern’s statements last year criticising the suitability of the Unitec Site for the then planned 2,600 dwellings, Phil Twyford could not address the concerns raised by his boss. … read more via hyperlink above …
    .
    .
    … LABOUR’S AUTHENTIC GREATS (who really did give a toss about the poor and disadvantaged) Michael Joseph Savage and John A Lee, will be turning in their graves in horror at Ardern’s and Twyford’s grossly expensive dense developments … shockingly … repeating the mistakes of the British …

    Inquiry. The Great British Housing Disaster (Adam Curtis, 1984) – YouTube

    https://www.youtube.com/watch?v=Ch5VorymiL4

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