Scomoprime draws more FHBs to property slaughter

A great time to celebrate as property investors handoff losing assets to 1ok extra FHB patsies:

David Llewellyn-Smith
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Comments

  1. As long as total housing credit growth is above 0% and the population does not increase anymore (no actual immigration at the moment), house prices in nominal terms should hold – and a house price flat line would probably be the best for the AU economy for the next couple of years. Without the First Home Owners, prices would be in retreat, and that will be avoided at ANY cost.

    • BrentonMEMBER

      The RoC in credit is all that matters. Take the last downturn in property prices, where credit growth was still positive, but was slowing from the 2017 peak.

      It is disgusting that they are trying to bail out baby boomers and older Gen Xers by offloading their investments onto younger generation patsies (near the highs!).

      • If we want to be precise, the variable to focus on would be total housing credit PER available dwelling. As the nr of dwellings expends at a higher pace than credit, one could still have prices falling – this could be the scenario now, where the housing stock is growing, but no immigration.

      • Yep more filial cannibalism… had radio on this morning, older Australians calling in with complaints of lack of travel refunds… quite a few had bookings in high $10,000s they were waiting on. One guy spent $75k on a cruise.

        Can’t help but thinking these are where those franking credits are going. And housing market bailouts to save these types. Not to mention his ilk screaming like a pigs everytime someone wants to take his taxpayer funded lifestyle perks away. How many younger are now out of work? The rorts have got to stop!

        • GlendaFMEMBER

          Toby, I too am a baby boomer (just), and am disgusted by the stories of those hugely expensive holidays while the younger generation is screwed (my kids are 29 and 25). Similarly, the ‘poor me’ stories about how they are saving the govt money by having several investment properties and now the rent isn’t being paid!!!! Boo Hoo!!!!
          We’re not all in those categories, I desperately want to see the imbalances resolved too.

    • Mitchell Stuart

      $20,000 out of Super, plus the stay-at-home double dole, you’re right deposit is not the issue. Any decent parent will gladly stump up the bit of cash to get to 20%.

      What we need is raw, hard subsidies for first home owners. Stamp duty waiving is not enough, we need raw cash bonuses.

      • Jumping jack flash

        Oh, I agree completely. The problem with housing affordability is not an affordability problem at all, it is a debt eligibility problem.

        With the right amount of debt, all things are within reach. You want a different supercar for each day of the week? No problems, all you need is the right amount of debt! You want 15 seaside mansions? Easy! Just get the debt and they’re yours.

        Make more people eligible for the required amounts of debt, and you solve the problem of affordability completely. There’s a couple of ways to do that, and a big cash handout to get over the banks’ eligibility bar is one of them!

        The other one is to lower the bar.

  2. If FHB only have 5% deposit and rest of (15% to get to the 20% LVR?) deposit is stumped by gov does that mean in next few weeks the FHB has burnt through their skin in the game and now its the good ‘ol tax payer is seeing their equity in the boondoggle evaporate?

    • ParadigmMEMBER

      Doesn’t quite work that way Stuart. @ 95% LVR the borrower would normally be paying LMI (Lenders Mortgage Insurance) which assuming a $500K valuation (QLD prices!) would be about $15K. The FHLDS just gets the borrower off the hook for the LMI, they are still borrowing @ 95% with the Fed Govt effectively being the insurer for the LMI.

      If the lender should ultimately foreclose on the borrower they will expect the government to make any loss they should suffer on the property. For the last 8 years LMI insurers (QBE & Genworth) have been making out like bandits on the LMI scam, because with property prices consistently going up, few foreclosures result in a loss. Of course now they are stuffed, as is the tax payer given our exposure via FHLDS.

      • Jumping jack flash

        “For the last 8 years LMI insurers (QBE & Genworth) have been making out like bandits on the LMI scam…”

        Indeed they do. Sounds very similar to the US and UK in 2008. The LMI underwriters where the ones who went under first. They’re the canary.

        If or when the Great Australian debt ponzi economy decides to go belly up, then the first ones to come screaming to the government and RBA for their TBTF bailouts will be the LMI underwriters.

      • DominicMEMBER

        Aha – so it’s not like the FHB grant where the total cost is limited to the grant itself.

        Better hope the property market doesn’t halve then or the taxpayer will be on the hook for a pile of loot.

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