They said it would never happen

The CBA has raised rates on its investor loan book with the greatest raise going to the highest risk category, interest only investor loans.  Personally I think that there should be a minimum deposit on and/or significant equity in a property in order to get a loan.  Our banks have provided similar services as led to the GFC and people have accepted high risk on a wing and a prayer.  We are doing the same thing as other countries, where it lead to mass financial losses and property down turns, and hoping for a different result. 

There are some commentators that would blame the banks and call for a Royal Commission.  While I understand this sentiment, banks like retailers will only provide services that people are willing to take on.  If people are willing to risk it all, in a game of mortgage casino and they lose, then the bank really is not the primary culprit.  The government however should see that all loans, except emergency interest only owner occupiers loans for home owners in temporary distress, have a minimum twenty percent deposit required.  Easy mortgage credit it crippling our country and it is only a matter of time before the populous wakes up and smells the blood and bone soaked roses at their feet.

From the above article:
"Fixed rates on interest-only loans will rise by 25 basis points, while investor home loans that are principal and interest will rise by 25 basis points. Investor loans that are interest only will rise by between 25 and 50 basis points. 
The changes are effective immediately."

I guess we will wait and see if other lenders follow the lead of the CBA as they did with previous interest rate rises.

More information here on Broker News online:

Another bank ME bank yesterday announced it was reducing risk in its loan book.  This was due to action by APRA (Australian Prudential Regulation Authority) working to reduce risks in the Australian economy.  This will mean that they will require a minimum deposit of ten percent of a property's value for interest home loans, interest only home loans for investors and owner occupiers.

Australian price growth flat according to this lead story with the Australian Financial Review, at 0.3% from 20th March to 20th April:

Three days ago, Deloitte's economist Chris Richardson announced that the average home in Australia is worth a million dollars and that these prices are inflated and
"dangerously dumb"

Read more about the potential recession no one, except those locked out of property staring into a future of obscenely expensive rent, wants to think about:

If anything, I think Chris Richardson's projects of a slide of nine percent in property prices and a loss of a half million jobs if China suffers financial difficulty may be a touch on the optimistic side.

Popular posts from this blog

No Yaz for me

Coffee on a cool Saturday morning

Gratitude on a hot winter's day