Welcome Guest [Log In] [Register]


Reply
  • Pages:
  • 1
  • 9
The Bond Bubble Collapse Thread; Reset Time. This is the End of the Line for All the Rolling Bubbles Propped Up in the last 30 Years
Topic Started: 21 Aug 2016, 04:02 PM (11,434 Views)
Jon Snow
Member Avatar


Rufus
13 Oct 2016, 01:06 PM
Which begs the question, could we establish a 30 year mortgage bond market at attractive rates?
I for one would be interested in a 15 year fixed mortgage (at some future point after the crash :D )
Speak when you are angry and you will make the best speech you will ever regret.
Ambrose Bierce
Profile "REPLY WITH QUOTE" Go to top
 
Rufus
Member Avatar


Jon Snow
13 Oct 2016, 07:51 PM
I for one would be interested in a 15 year fixed mortgage (at some future point after the crash :D )
CBA offer a 7 year fixed product at 4.99%
Take risks - if you win you will become wealthy, if you lose you will become wise
Profile "REPLY WITH QUOTE" Go to top
 
Jon Snow
Member Avatar


Rufus
13 Oct 2016, 08:06 PM
CBA offer a 7 year fixed product at 4.99%
That looked like an absurd term premium in a ZIRP world, but I just checked bond rates, and it lines up fairly well. Having said that, the bond curve is extremely inverted after 5 years. Seems like a fairly strong flight to safety in the long end of the curve.

Let me crunch some numbers.
Speak when you are angry and you will make the best speech you will ever regret.
Ambrose Bierce
Profile "REPLY WITH QUOTE" Go to top
 
Rufus
Member Avatar


Jon Snow
13 Oct 2016, 08:22 PM
That looked like an absurd term premium in a ZIRP world, but I just checked bond rates, and it lines up fairly well. Having said that, the bond curve is extremely inverted after 5 years. Seems like a fairly strong flight to safety in the long end of the curve.

Let me crunch some numbers.
it's a free world but I wouldn't touch it.
I've only met one person who took out a 7 year loan and I can tell you she wasn't happy.

What really hurts fixed loans is the exit cost. If you choose to sell at anytime during the term you will have to reimburse the bank for any economic cost they suffer as a result of that contract termination.

Funny thing is though, if they win when you break the contract, they keep the winnings.
Take risks - if you win you will become wealthy, if you lose you will become wise
Profile "REPLY WITH QUOTE" Go to top
 
Rastus2
Member Avatar


Rufus
13 Oct 2016, 08:59 PM
it's a free world but I wouldn't touch it.
I've only met one person who took out a 7 year loan and I can tell you she wasn't happy.

What really hurts fixed loans is the exit cost. If you choose to sell at anytime during the term you will have to reimburse the bank for any economic cost they suffer as a result of that contract termination.

Funny thing is though, if they win when you break the contract, they keep the winnings.

I took 5 year fixed a couple of times, as well as 3 year... won twice as rates rose, lost once. 7 or even 10 year would not bother me if the long term plan was sound and was not at risk of sudden liquidation.

Your right, the exit fees are a bugger, and not exactly even handed when you exit with rates going in your favor as I did once when we sold our IP... got some benefit, but not as much as they would have charged if the rates had gone the other way.


I am very envious of the American fixed rate mortgages .. 30 years at a low rate... wow.

Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
Profile "REPLY WITH QUOTE" Go to top
 
Jon Snow
Member Avatar


Rufus
13 Oct 2016, 08:59 PM
it's a free world but I wouldn't touch it.
I've only met one person who took out a 7 year loan and I can tell you she wasn't happy.

What really hurts fixed loans is the exit cost. If you choose to sell at anytime during the term you will have to reimburse the bank for any economic cost they suffer as a result of that contract termination.

Funny thing is though, if they win when you break the contract, they keep the winnings.
Sure, why take out fixed right now when the only way for variable is down.

Still, there is probably a floor on mortgage rates. Bank spreads over the short rate are around 250bps, I don't see that changing unless the government decides that banks are utilities and their return on equity should be regulated.

So once the variable hits 2.5%, it's probably not going anywhere from there, so there is no difference in rate, but there will probably still be a risk premia for longer term loans.
Speak when you are angry and you will make the best speech you will ever regret.
Ambrose Bierce
Profile "REPLY WITH QUOTE" Go to top
 
createdby
Default APF Avatar


Out of bonds and into stocks...for now.
But it might boom again when they ZIRP and NIRP or QE4. Then comes FINANCIAL REPRESSION (forcing banks to buy bonds).


http://www.bloomberg.com/news/articles/2016-11-18/global-bonds-head-for-biggest-two-week-loss-in-quarter-century
Global Bonds Poised for Biggest Two-Week Loss in Quarter Century
by Wes Goodman Yun Li
November 18, 2016 — 2:39 PM AEDT Updated on November 19, 2016 — 1:58 AM AEDT


Bonds around the world headed for their steepest two-week loss in at least 26 years as President-elect Donald Trump sends inflation expectations surging.

The Bloomberg Barclays Global Aggregate Index has fallen 4 percent in the period through Thursday. It’s the biggest two-week rout in data going back to 1990. Federal Reserve Chair Janet Yellen contributed to the decline by saying Thursday an interest-rate hike could come “relatively soon.”

Posted Image

"We’ve seen a sharp and swift move since the election, which is pricing in the potential future policies of Trump," said Sean Simko, who manages $8 billion at SEI Investments Co. in Oaks, Pennsylvania. "The big question is to what extent these policies are going to be implemented, and how quickly are they going to be implemented."

Treasury 10-year note yields fell two basis points, or 0.02 percentage point, to 2.28 percent as of 9:34 a.m. in New York, according to Bloomberg Bond Trader data. The yield touched 2.34 percent, the highest since December, and has risen 0.5 percentage point since Nov. 4. The 2 percent security due in November 2026 was at 97 17/32.

“Trump is a game changer,” Park Sung-jin, the Seoul-based head of investment at Mirae Asset Securities Co., which oversees $7.6 billion. “I was bearish, but the current level is more than I expected.”

The selloff has gone fast enough that it’ll probably pause before yields press higher in 2017, Park said.

Read more: Don’t fight the Trump tidal wave

Yellen, addressing U.S. lawmakers Thursday, signaled the U.S. central bank is close to lifting interest rates as the economy continues to create jobs at a healthy clip and inflation inches higher.

The president-elect’s pledges include tax cuts and spending $500 billion or more over a decade on infrastructure, a combination that’s seen as spurring quicker growth and price gains in the world’s biggest economy. Trump has also blamed China and Mexico for American job losses and threatened punitive tariffs on imports, a move that may spur inflation.

The difference between yields on U.S. 10-year notes and similar-maturity Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices over the life of the debt, rose to as much as 1.97 percentage points this week, the highest since April 2015.

Trump Impact

Ten-year Treasury notes will yield from 2.5 percent to 2.75 percent a year from now if Trump pushes through his proposed tax cuts and fiscal-spending policies, said Michael Kushma, chief investment officer for global fixed income at Morgan Stanley Investment Management.

A strengthening dollar and Trump policies that curb trade may hurt growth and limit the increase in yields, Kushma, who helps oversee $406 billion, said in an interview in Singapore.

“We’re still worried about rising U.S. yields,” he said. “In the short term, we think they’ve peaked. They could easily go up again.”
Profile "REPLY WITH QUOTE" Go to top
 
Foxy
Member Avatar
Zero is coming...

Rufus
13 Oct 2016, 08:06 PM
CBA offer a 7 year fixed product at 4.99%
wow

They also do a 15 year but at a much higher rate.
Rufus
13 Oct 2016, 08:59 PM
it's a free world but I wouldn't touch it.
I've only met one person who took out a 7 year loan and I can tell you she wasn't happy.

What really hurts fixed loans is the exit cost. If you choose to sell at anytime during the term you will have to reimburse the bank for any economic cost they suffer as a result of that contract termination.

Funny thing is though, if they win when you break the contract, they keep the winnings.
I almost always fix loans and yes it costs me extra, but I don't care that much.

I am paying 8% on some and 4% on a variable loan, average would be at 6% and dropping.

Generally 5 years is where I fix, I would fix for 30 years but that is not available here in Australia.

On fixed term loans there is normally a provision to pay off an additional $10,000 per year.

At no penalty.

This is a good way to be in front on your loans.

No loans of course would be the preference.

The man with no loan would be at a minimum 4% better off per year than the man with a loan.

4% compounded over a life time would be nice.

Tax adjusted.



Edited by Foxy, 19 Nov 2016, 10:42 AM.
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
Profile "REPLY WITH QUOTE" Go to top
 
Sydneyite
Member Avatar


The move is rapid, but in terms of actual price, bond prices / implied yields were at a similar level just 12 months ago, and prices/yields were lower/higher just 18 months ago. So will be interesting to see if the current trend continues, or even if current levels are maintained.
For Aussie property bears, "denial", is not just a long river in North Africa.....
Profile "REPLY WITH QUOTE" Go to top
 
createdby
Default APF Avatar


Just Wall Street getting that sweet commission. Since the price of money went to zero, funds go in and out of assets, whichever is the flavor of the month.

They then spend their commission on real assets: gold, real estate, art, hard currency.

This Trump boost is just another bubble to pile on. Another flavor of the month financial asset to bubble and pop.

The will keep doing this until the money runs dry (gets written off as bad debt in some counterparties' book).

We all know from the Japanese playbook that fiscal spending is as ineffective as monetary spending.

Japan, the industrial powerhouse, built roads, bridges, and airport to nowhere and only drove them deeper into deflation and deeper into debt (the highest in the world).

People may say demographics played a part, but that's also the Trump playbook. Anti-immigration policies will have the same effect on US demographics.

The end result of Trumponomics is an even higher debt to GDP.

Japan also had sporadic boosts in Nikkei in the last 20 years, only for it to pop in a downward trend. The US will be no different.

Hold on to hard assets: gold, silver, real estate, art, hard currency out of the banks IN SMALL DENOMINATIONS as we're learning (of anything above the government insured limit), directly owned shares in a trading account (not in indexes or ETFs) in solid companies.
Edited by createdby, 19 Nov 2016, 11:14 AM.
Profile "REPLY WITH QUOTE" Go to top
 
1 user reading this topic (1 Guest and 0 Anonymous)
ZetaBoards - Free Forum Hosting
Join the millions that use us for their forum communities. Create your own forum today.
Learn More · Register Now
Go to Next Page
« Previous Topic · Australian Property Forum · Next Topic »
Reply
  • Pages:
  • 1
  • 9



Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.

Forum Rules: The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.

Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.

Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.

This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.

For more information go to Limitations on Exclusive Rights: Fair Use

Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ

Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy