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Is this the up tick before the bust?; Investors unable to control themselves
Topic Started: 17 Jan 2017, 03:19 PM (2,945 Views)
Chris
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http://www.theage.com.au/business/banking-and-finance/housing-investor-loan-approvals-surge-214-per-cent-in-a-year-20170117-gtswys.html

Melbourne and Sydney are again driving a resurgence in investor lending up over 20% yoy. Is this the smart money or are these idiots so out of control they can't help themselves and are oblivious to the risk
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GloomBoomDoom
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http://www.news.com.au/finance/real-estate/buying/one-in-five-homeowners-will-struggle-with-rate-rise-of-less-than-05/news-story/9ce9a93aa5facfb5f1ff51c3ce36c192
MSE
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b_b
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GloomBoomDoom
18 Jan 2017, 08:12 AM
Which is why rates are unlikely to rise - at least to the levels of the last cycle.
(S – I) + (T - G) + (M - X) = 0
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stinkbug
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I do have to wonder just how far Sydney and Melbourne can really go. I'm not invested in either if these cities, so it's more an academic interest for me.
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Khaderbhai
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Wealthy Suburbanite

Quote:
 
Is this the up tick before the bust?
Uptick? It's been going on since 2012.
Banks can't repossess your home simply because the market value falls. Australia's Consumer Credit Code says consumers aren't liable for things ordinarily outside their control and can't be held to obligations that could only be met by selling their home. Click for details.

"The truth is that there are no good men, or bad men. It is the deeds that have goodness or badness in them. There are good deeds, and bad deeds. Men are just men."
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Bardon
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stinkbug
18 Jan 2017, 08:26 AM
I do have to wonder just how far Sydney and Melbourne can really go. I'm not invested in either if these cities, so it's more an academic interest for me.
They are about half way through their growth to peak and have another 10 years left in this leg up, a mid cycle slump will happen as well.
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Chris
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Bardon
18 Jan 2017, 09:34 AM
They are about half way through their growth to peak and have another 10 years left in this leg up, a mid cycle slump will happen as well.
Wrong.
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Admiral Rimmer
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GloomBoomDoom
18 Jan 2017, 08:12 AM
What about cost of o/s funding? Do you think it will have much impact?
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b_b
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Admiral Rimmer
18 Jan 2017, 09:55 AM
What about cost of o/s funding? Do you think it will have much impact?
Nope. The overwhelming cost of funds for banks are aud retail and wholesale deposits, which are directly controlled by the RBA.

But banks will use it as an excuse to expand margins - if they can get away with it.
stinkbug
18 Jan 2017, 08:26 AM
I do have to wonder just how far Sydney and Melbourne can really go. I'm not invested in either if these cities, so it's more an academic interest for me.
I think we are very close to the end.
Edited by b_b, 18 Jan 2017, 10:08 AM.
(S – I) + (T - G) + (M - X) = 0
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Rufus
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b_b
18 Jan 2017, 10:07 AM
Nope. The overwhelming cost of funds for banks are aud retail and wholesale deposits, which are directly controlled by the RBA.

But banks will use it as an excuse to expand margins - if they can get away with it.
I think the cost of offering offset accounts has pushed up their funding costs.

Initially they were a novelty used by the financially savvy, but now pretty much everyone understands and uses them.

There are lots of loans completely covered by credit funds in the offset account, and many many more that are largely covered by credit funds. Back in the seventies people were borrowing at rates over 10% but only getting 3.75% on their savings. Big margin.
Take risks - if you win you will become wealthy, if you lose you will become wise
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