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What if mortgage rates went to 7%?
Topic Started: 25 Oct 2016, 11:39 AM (5,646 Views)
Ex BP Golly
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Rufus
26 Oct 2016, 12:30 PM
And your reason to think that is what??????????
It is clear you are wrong given the numbers of people being later caught and prosecuted for fraud.

WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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Bardon
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chunty
28 Oct 2016, 03:36 PM
I ran my own model assuming 8% long-term interest rates from FY20 onwards to get the amount of debt I was comfortable taking on (assuming kids in a few years, can pay it down in 10-15 years). Whilst the bank said they were stress testing me at 7-8%, they offered about 50% more debt than I felt comfortable taking on, so I don't put a lot of weight on the 7% stress testing by banks. If I took all the debt they were offering at 7% interest rates, I would still be repaying debt well into my 50's.
It starts to bite when you own multiple properties and they also reduce your rental income by 70% and allow for a far smaller neagtive gearing benefit than you would be entitled to.e s
As you have found out owner occupiers are very low risk to both themselves and their lenders.
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Rufus
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Ex BP Golly
28 Oct 2016, 06:33 PM
It is clear you are wrong given the numbers of people being later caught and prosecuted for fraud.
Oh I'm sorry to hear that you have been charged with mortgage fraud.

I suggest that you come clean and admit your sins, maybe you'll escape jail.
Take risks - if you win you will become wealthy, if you lose you will become wise
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Foxy
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Zero is coming...

A greater question is what happens when house prices drop 10%??

So then you have nominal interest rates at 4% and real interest rates of 14%.

I lived through rates of 23%.

You could have them again but In the form of @Real@ interest rates through the deflation of asset prices, and if the event horizon of commitments rising faster than net assets, you get an issue of declining equity, the end game for that investor has already been set.

Peter
So someone in Karratha buys a house at say $1m, interest rate of 5% over 6 years, there is $250,000, then you get a drop of $700,000 in price add that to the $250,000 interest plus settlement costs, you get $1m, but they still owe $900,000??

Far out man.

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Edited by Foxy, 29 Oct 2016, 11:27 AM.
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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Jon Snow
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foxbat
29 Oct 2016, 11:16 AM
You could have them again but In the form of @Real@ interest rates through the deflation of asset prices, and if the event horizon of commitments rising faster than net assets, you get an issue of declining equity, the end game for that investor has already been set.
Ye olde liquidity trap. Gets them every time. Then they whine and moan and the government spends our future on bailing these losers out.
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So someone in Karratha buys a house at say $1m, interest rate of 5% over 6 years, there is $250,000, then you get a drop of $700,000 in price add that to the $250,000 interest plus settlement costs, you get $1m, but they still owe $900,000??

https://www.youtube.com/watch?v=7ttKJwvFIgw
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