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Negative Equity Stats
Topic Started: 8 Jun 2017, 10:00 AM (2,139 Views)
SittingOnDeFence
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Are there stats that display houses in negative equity?

For instance say someone got 95% LVR based on a deposit and using equity from their PPOR or another asset. If the price drops by 5% they won't be allowed to sell, or they would at least have to clear the loan amount and take a hit.

Are there stats released that reflect this? They may not be in arrears or mortgage stress but they can't sell.
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Rufus
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SittingOnDeFence
8 Jun 2017, 10:00 AM
Are there stats that display houses in negative equity?

For instance say someone got 95% LVR based on a deposit and using equity from their PPOR or another asset. If the price drops by 5% they won't be allowed to sell, or they would at least have to clear the loan amount and take a hit.

Are there stats released that reflect this? They may not be in arrears or mortgage stress but they can't sell.
No there aren't and nor will there be.

Who owns what property, when they bought and how much they paid are pubic records, so that is accessible, but how much they borrowed is a private record especially if they used equity in another property, which is quite common.

If they did use another property, it's quite unlikely that they would have used a 95% facility. Lenders aren't that easy with investors, and the cost of the LMI makes the deal a not so great investment.

Edited by Rufus, 8 Jun 2017, 10:28 AM.
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Tyson
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SittingOnDeFence
8 Jun 2017, 10:00 AM
Are there stats that display houses in negative equity?

For instance say someone got 95% LVR based on a deposit and using equity from their PPOR or another asset. If the price drops by 5% they won't be allowed to sell, or they would at least have to clear the loan amount and take a hit.

Are there stats released that reflect this? They may not be in arrears or mortgage stress but they can't sell.
I'm assuming it'd be very hard to get stats that accurately reflect that. It'd be interesting to see if there are broad stats and the specific areas but it won't be anything accurate.

Without people doing a proper personal valuation on each individual property, there's no way of being able to accurately determine the estimated value of the house. I'm assuming the banks wouldn't even know if your house dropped 5% unless you got a valuation after it was dropped. It'd have to drop by a lot more than 5% for banks to investigate it I imagine.

Online price guides can easily be out by a factor of 5 - 10%, sometimes more.

If someone with negative equity went to sell a house and the real estate agent told them how much the house would sell for and it was far lower than they could go, they'd probably just hold it if they weren't in arrears or mortgage stress so it'd never really be documented.
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GloomBoomDoom
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http://www.news.com.au/finance/real-estate/renting/trust-me-nat-i-actually-know-a-bit-about-this-sunrise-rent-or-buy-debate-gets-pretty-awkward/news-story/c554726a05139ea105ac7ebe996d2967
MSE
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jrsnr
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you may be able to infer some little information from RMBS data

caveat RMBS is small subset of Australian residential property so may not correlate with overall market

Fitch Ratings regularly put out reports on RMBS which include data on mortgage insurance claims e.g. mortgage insurance claim is the deficiency between sale price and loan

how the number of defaults in negative equity relates to the overall number of mortgages in negative equity is another story
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Trollie
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jrsnr
8 Jun 2017, 03:34 PM

how the number of defaults in negative equity relates to the overall number of mortgages in negative equity is another story
Equity and defaults aren't related at all.
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Ex BP Golly
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SittingOnDeFence
8 Jun 2017, 10:00 AM
Are there stats that display houses in negative equity?

For instance say someone got 95% LVR based on a deposit and using equity from their PPOR or another asset. If the price drops by 5% they won't be allowed to sell, or they would at least have to clear the loan amount and take a hit.

Are there stats released that reflect this? They may not be in arrears or mortgage stress but they can't sell.

Broker news talks about a Roy Morgan survey. Maybe R.M. does this every year or two?

Hope this provides some assistance:

"
Across Australia, 311,000 (or 6.8% of) mortgage holders have been found to have little or no real equity in their home, according to a recent report from Roy Morgan...."


http://m.brokernews.com.au/news/breaking-news/negative-equity-risk-for-nearly-7-of-australian-mortgage-holders-224577.aspx
.
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Matthew
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Ex BP Golly
8 Jun 2017, 08:44 PM

Broker news talks about a Roy Morgan survey. Maybe R.M. does this every year or two?

Hope this provides some assistance:

"
Across Australia, 311,000 (or 6.8% of) mortgage holders have been found to have little or no real equity in their home, according to a recent report from Roy Morgan...."


http://m.brokernews.com.au/news/breaking-news/negative-equity-risk-for-nearly-7-of-australian-mortgage-holders-224577.aspx
.
So 93% of us have between some and massive amounts of real equity.

Must suck to be Simon.
My only hope for my three boys is that they turn out nothing at all like Chris.
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Chris
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Matthew
8 Jun 2017, 09:59 PM
So 93% of us have between some and massive amounts of real equity.

Must suck to be Simon.
Your tiny impotent mind fails to see that equity is nothing more than a hypothetical value based on current economical circumstances, what number would this 6.8% turn out to be if prices fell 5% or 20%? What if they fell 30%, are we looking at 50% with no or negative equity?

Your cognitive deficiencies amuse me
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Rat
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Filthy Rodent

Ex BP Golly
8 Jun 2017, 08:44 PM
Across Australia, 311,000 (or 6.8% of) mortgage holders have been found to have little or no real equity in their home, according to a recent report from Roy Morgan...."
6% is bugger all, and this "little or no equity" is nothing more than a hypothetical value based on current economic circumstances.

What number would this 6% turn out to be if prices rise another 5% or 20%? What if they rise 30%, are we looking at 0% with no equity?
Edited by Rat, 9 Jun 2017, 12:09 AM.
Consumer protection laws extended to small businesses. Banks not permitted to repossess due to non-monetary defaults (for example, a fall in the property value).
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