Owner-occupier mortgages have no pulse

Via CoreLogic weekly indicators. Leading mortgages for owner-occupiers have no pulse, down materially year on year and flatlined:

Weak listings are some support for prices but for how long as we go over the fiscal and prudential cliffs:

Does anyone doubt that if the RBA had any kind of power left in the monetary defibrillator then it would be complusively jerking the trigger? Full report.

David Llewellyn-Smith
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Comments

  1. The clamor for MMT will grow ever louder, of course, but we just have go over the fiscal cliff first to persuade TPTB into action.

    Just send my cheque already 😉

  2. Goldstandard1MEMBER

    I like it. Let’s call current owner occupiers broadly over-extended so they are ‘flatliners’.
    Kevin Bacon is ScoMo. Be careful what they bring back with them….

  3. alwaysanonMEMBER

    After going through the process of getting one recently as an owner-occupier I am convinced that the banks (at least ING) have raised their standards and have gotten more conservative instead of lowering them like some recent articles here have said.

    They went through our entire lives transaction by transaction going back 3-4 months, wanted tax returns, kept re-checking we were not COVID impacted (especially my wife who works for a University) etc. And this was for a mortgage for an existing standalone house (not off the plan etc.) and where we had a nearly 50% cash deposit and were only asking for 1/3 of the initial amount they said they’d lend us based on our income.

    Perhaps I was being naive but I thought with that much of a deposit that it would sail through. Instead it was a month long process that felt like a financial root canal.

    If anything I think that they couldn’t believe how much of a deposit we had without it being an inheritance or boomer parent gift (their initial assumptions they wanted substantiated with paperwork) and so started really digging into our lives to understand how it was possible. Maybe some of it was KYC compliance too because we transferred all our savings into ING to get ready to fund the deposit (some from the US where I am a dual citizen, have a bank account and had some investments) which seemed to really freak them out.

    • Arthur Schopenhauer

      I had a similar experience 6 years ago. Anyone coming with a large deposit seems to be treated with a great deal of suspicion. It’s so unusual, the regular loans officers just can’t conceive any right minded person could, let alone would, save a 50% deposit.

      • Not if you’re foreign with a couple of suitcases full of cashola!! Then they’ll fawn all over you, isn’t that how money laundering works?

      • Jumping jack flash

        Hats off to anyone who has actually saved a 50% deposit from scratch and it isn’t what’s left over from a lump of someone else’s debt after paying out the balance and interest on a prior loan that was rolled over onto said debt patsy.

        Using a larger pile of debt to repay existing debt is the foundation of the New Economy. Its hardly ground-shaking stuff. In fact I’d say it was expected.

        Banks would know this. Maybe they’re simply being all coy?

    • Interesting. Thanks for that info. It kind of jibes with a preliminary discussion I had with my Bank (former credit union) that I have banked with since I was 13. I called to discuss the possibility of getting a home loan either for purchase or as rentvestor in Feb this year. When I explained my cash deposit, precious metals, USD cash and shares they were like, wow you have wide variety of assets. I got the feeling that it was very unusual. I did not mention my crypto holdings. Anyway they were prepared to lend 3x incomes for owner occupied but about 5x income for rentvesting. I would not get a look-in now due to my never ending status as being stood down here in lockdown Vic.

    • Interesting.

      We got an AIP from WBC about 1 month ago, on ~4.4LTI for an OO/P&I. >30% deposit. No debts. Own our cars. Tiny ccard limits.

      Standard checks – 90 days transaction accounts (where pay goes into), ccards, savings, 2 x payslips.

      Upon buying something, and the val being done, only took 5 days to go unconditional.

      It hasn’t changed materially in say 9 years – the process “feels” the same.

      Newcastle Permanent approved a loan app in 24 hrs, same numbers, and was ready to go unconditional the next day with a val.

      By the way, Newcastle has an under the table offer of 2.49 variable on their basic account type if you ask. No offset, $10/redraw.

      Some of these banks are super sloppy though, thinking of NAB in this case. ie couldn’t complete a loan as the loan officer was on a month’s leave. WTAF

  4. Sydney is interesting. They still have decent listings and credit growth but falling prices.
    Must mean that sellers are leaning into buyers.
    If have have to hypothesise further, I would say long term owners who have large equity build up are happy to sell at discount as they still seen great growth over 5+ years.
    Others who bought at the peak or over leveraged will sit on their hands and hold out hoping the downturn is not too deep or too long.

    • Reus's largeMEMBER

      3 of my wife’s colleges / friends are doing exactly that selling out in Sydney and buying cheaper elsewhere.

  5. Only the loan-ly (dum-dumb-dummy doo-wah)
    Know the way I feel tonight (ooh yay, yay, yay, yeah)
    Only the loan-ly (dum-dumb-dummy doo-wah)
    Know this feeling ain’t right (dum-dumb-dummy doo-wah)

  6. Jumping jack flash

    “Does anyone doubt that if the RBA had any kind of power left in the monetary defibrillator then it would be complusively jerking the trigger?”

    They hit the zero bound so the batteries in their defibrillator are more of less flat now.

    The RBA was all fine and dandy with the economic abomination of interest rate manipulation, but now that they’ve manipulated all they can, they baulk at going deeper. So what’s their plan? “Aww shucks guys we hit the zero bound. Who could have ever thought that day would arrive after 20 years of continuous rate cuts, required to keep things going? Well, I guess that’s it then. We’ve had a good run. Nice knowing you, economy”.

    Interest rate manipulation is the gateway drug. By 2017 they’d done so much it was just like drinking water. Now they need to get onto some harder stuff to get the same buzz out of the banks and the economy, like NIRP and even darker stuff.

    Bill is right now waving the NIRP sachet around under their noses and telling them how gooood it is!