Genworth Mortgage Insurance has recently had an IPO and is now listed on the ASX. The performance of this stock and the profitability of the company should closely track the credit cycle and the demand for credit for housing. Should be a good source for an indication of the strength of this upward cycle. Could even be a buy right now if you think we are in an upward cycle and a short much later on.
Genworth Mortgage Insurance has recently had an IPO and is now listed on the ASX. The performance of this stock and the profitability of the company should closely track the credit cycle and the demand for credit for housing. Should be a good source for an indication of the strength of this upward cycle. Could even be a buy right now if you think we are in an upward cycle and a short much later on.
Mortgage insurance mmmm...... How safe is that ?, with everybody mortgaged to the hilt and paying Interest only loans with record lows Interest rates while unemployment at ten year highs and rising. Would be more inclined to put my money in the debt collecting business. Now there's a winner for the future.
If what happened to AIG in the last cycle is anything to go by then then Gemworth being an integral part of the credit cycle should at least be a good forward indicator of land values.
See AIG chart, below and lets say for argument sake that Gemworth price is now equivalent to AIG's in 1985.
At this stage of the credit cycle there is every likelihood that the amount of credit will start to increase and continue to increase.
Mortgage insurance will increase LVR's and allow more buyers to enter and therefore create more credit, the more credit that is created the more credit that others will need to purchase increasing land values.
if the AIG experience is anything to go by then this stock will be a good indication of what is going on in the property market and once it peaks then we will know that we are on the last phase of the run up.
There is miles to go on this cycle before the drunk falls off the cliff.
"In a note to clients last week, CLSA analyst Jan van der Schalk likened observing Genworth’s share price rise to “watching a drunk chase a balloon near the edge of a cliff”.
Mortgage insurance mmmm...... How safe is that ?, with everybody mortgaged to the hilt and paying Interest only loans with record lows Interest rates while unemployment at ten year highs and rising. Would be more inclined to put my money in the debt collecting business. Now there's a winner for the future.
Mortgage Insurance
Is it true that the majority of Aus mortgages are interest only?
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