Australia's housing boom has made mortgages safer Link
The housing boom has had a positive impact for those Australians with a mortgage.
Most home owners now have fatter equity — the difference between the house value and the size of the home loan — giving them a better cushion against any potential downturn.
Moody’s Investors Service, in its latest analysis, says the loan to value ratios for Australian residential mortgages have fallen because of rising house prices, resulting in additional equity.
The ratings agency says rising prices have on average added 14 percentage points of equity but the size of cushions differs across states. Strong housing price growth in Sydney and Melbourne have created the highest additional equity cushions in Australia. In NSW, the additional equity cushion is 21 percentage points and in Victoria it is 17%.
In Queensland the additional equity cushion is 9% and in South Australia it is 10%.
In Western Australia, where housing prices have come under pressure owing to the downturn in mining, the additional equity cushion turned negative, with the loan to valuation ratio one percentage point higher.
Over the last seven years, housing prices have increased by 45% on average across Australia.
In Sydney, prices jumped 74%, in Melbourne by 52%, 10% in Adelaide and 9% in Brisbane.
In Perth, housing prices have fallen 8% from their peak in December 2014, a fall of 1% over the seven years.
Note: I don't fully agree with this. The safest mortgage is a small one being paid by someone on a relatively high income, but mortgage equity buffers do add to stability.
Take risks - if you win you will become wealthy, if you lose you will become wise
A hypothetical analysis based on house price rises and ignores any potential that the sheeple may have used the 'equity' to buy more property, cars, holidays, shares etc.
Another polished turd Pete.
It also ignores the fact that equity is irrelevant for the $4mil Australians who live in a PPOR as an OO and pay their mortgage but don't leverage of it to purchase other investments or derive any other income through room rentals or short stay accomodation.
It would also be extremely irrelevant in a down turn as equity is a theoretical value based on perception, if sentiment is negative values fall and so does equity. Equity also can't be drawn upon to pay the mortgage so in short this article is bullshit which I'm sure you are aware of so why post it?
Fools like Chris 'n Rastus 'n Terry sometimes get just a bit too hard on me head.
Herb, I think it's because you might be an idiot but it's hard to tell given the dialect you choose to communicate with.
Equity does not make your mortgage safer in anyway shape or form if it's solely based on capital gains. The article suggests a mortgage holder would be in a better financial position if the value of their home has risen making their mortgage safer. If you have had your first mortgage for under 5yrs then you've oaid FA off it so how is a 20% capital gain going to make that mortgage safer, assuming you remain living in it and don't sell it.
Herb, I think it's because you might be an idiot but it's hard to tell given the dialect you choose to communicate with.
Equity does not make your mortgage safer in anyway shape or form if it's solely based on capital gains. The article suggests a mortgage holder would be in a better financial position if the value of their home has risen making their mortgage safer. If you have had your first mortgage for under 5yrs then you've oaid FA off it so how is a 20% capital gain going to make that mortgage safer, assuming you remain living in it and don't sell it.
Complete furphy
Me assessment that ya a fool has got f*** all ta do wif wot that article did or didn't say Chris.
A Professional Demographer to an amateur demographer:"negative natural increase will never outweigh the positive net migration"
Note: I don't fully agree with this. The safest mortgage is a small one being paid by someone on a relatively high income, but mortgage equity buffers do add to stability.
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.
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