Australia housing bubble

[Citroënbender]

That 12,5% are the liars who were honest about lying.

[T3rminator]

How many low doc loans got dished out during the "boom"?

What percentage of the "liar loans" were low doc loans?

On a traditional loan, from a traditional bank, they go through all your records - bank statements to see spending habits, proof of income statements etc. Although you could probably still get away with little "non full truths".

[Yellow_Festiva]

Originally Posted by Citroënbender

That 12,5% are the liars who were honest about lying.

Yep, unfortunately I'm in that group lol. When the system in place can't think outside the box then you give the system the answers they need.

[blueoval]

I can foresee a lot of mortgagee sales happening in the coming months from the fraudulent loan docs especially if interest rates continue to increase the way they are.

[T3rminator]

Originally Posted by blueoval

I can foresee a lot of mortgagee sales happening in the coming months from the fraudulent loan docs especially if interest rates continue to increase the way they are.

Excess stock will be absorbed by overseas people coming back. In particular, am hearing a lot of honkies, who previously held PR here but went back to HK for business, are starting to return. Cost of living has hit the stratosphere over there, they are selling up their pigeon holes, and coming back to buy the $1-$2m homes and have spare change to live comfortably.

[hayseed]

My Wife has a work Colleague Who Built a new House 2 years ago. & got a Home loan with a Low Honeymoon Introductory Rate...!!

The Honeymoon Finished a couple of Weeks ago..LOL

Payments have gone from $850 a Fortnight to a touch over $1300 a Fortnight..
She & her Husband went and had a whinge to Westpac. To no avail..

[Citroënbender]

Nobody told them it might happen?

It’s amazing how many people are claiming mortgage stress but won’t take in a lodger or create a granny flat on the sly.

[Syndrome]

Originally Posted by hayseed

My Wife has a work Colleague Who Built a new House 2 years ago. & got a Home loan with a Low Honeymoon Introductory Rate...!!

The Honeymoon Finished a couple of Weeks ago..LOL

Payments have gone from $850 a Fortnight to a touch over $1300 a Fortnight..
She & her Husband went and had a whinge to Westpac. To no avail..

Anybody who purchased in the last 12 to 18 months is in for a "surprise"

[GO FURTHER]

What's needed in Australia, are banks or lending institutions that can offer borrowers a 20 or 30 year fixed interest rate loan.

That would take the uncertainty out of the equation for many mortgage holders and who would no longer be held hostage to any RBA future rate increases, using the only blunt tool they have to curb inflation.

The maximum fixed interest rate loan period currently on offer in Australia is 10 years from the ANZ, RAMS, and two others.

In the USA, many borrowers are on 30-year fixed interest rate loans.

Yes, they are more expensive (currently) than variable rates... But over the course of 30 years, you may break even in the long term, especially if interest rates ever go back to the high rates we saw in the 80's and early 90's. (never say never).

In the US, you can even re-finance your 30 year fixed home loan to another loan, if interest rates drop... So you are not locked in for "life".

Australia’s mortgage market is unlike almost any other in the world, boasting one of the highest rates of variable interest loans.

Maybe more American banking institutions that offer home loans need to open up shop here.

Over 4,400 banks (not branches) in the USA versus our big 4 plus another 93 or so. (Yes, the US population is magnitudes greater than Oz, but still more banks in the US per capita if you do the sums).

Competition is good for consumers.

Would you buy a $100,000 plus car on a variable interest rate car loan?
Probably not.

Food for thought.

[Polyal]

Originally Posted by GO FURTHER

What's needed in Australia, are banks or lending institutions that can offer borrowers a 20 or 30 year fixed interest rate loan.

That would take the uncertainty out of the equation for many mortgage holders and who would no longer be held hostage to any RBA future rate increases, using the only blunt tool they have to curb inflation.

The maximum fixed interest rate loan period currently on offer in Australia is 10 years from the ANZ, RAMS, and two others.

In the USA, many borrowers are on 30-year fixed interest rate loans.

Yes, they are more expensive (currently) than variable rates... But over the course of 30 years, you may break even in the long term, especially if interest rates ever go back to the high rates we saw in the 80's and early 90's. (never say never).

In the US, you can even re-finance your 30 year fixed home loan to another loan, if interest rates drop... So you are not locked in for "life".

Australia’s mortgage market is unlike almost any other in the world, boasting one of the highest rates of variable interest loans.

Maybe more American banking institutions that offer home loans need to open up shop here.

Over 4,400 banks (not branches) in the USA versus our big 4 plus another 93 or so. (Yes, the US population is magnitudes greater than Oz, but still more banks in the US per capita if you do the sums).

Competition is good for consumers.

Would you buy a $100,000 plus car on a variable interest rate car loan?
Probably not.

Food for thought.

Interesting although I am not sure Americas recent history would show they are the gold standard for economic management either.

IMO its the simple fact that housing is used as a wealth building tool in Australia, the fact that its a primary source of security for people seems to get missed.

[Charliewool]

Originally Posted by GO FURTHER

Would you buy a $100,000 plus car on a variable interest rate car loan?
Probably not.

Food for thought.

Thousands DO already… Their $90,000 SUV simply added to their home loan!

[T3rminator]

Originally Posted by Charliewool

Thousands DO already… Their $90,000 SUV simply added to their home loan!

It was bloody tempting a couple of years ago! Weren't dealerships themselves offering 1-2% interests on new car loans at one stage? Obviously done through an underwriter bank.

[GO FURTHER]

Originally Posted by Charliewool

Thousands DO already… Their $90,000 SUV simply added to their home loan!

True, a line of credit or draw down on your home loan is still one of the cheapest forms of finance you can get.

One of the reasons, I virtually paid off my mortgage but left $500 still owing on it, is so the loan remains "open", and that huge line of credit is always there for a rainy day.
The minute monthly interest on it is worth it to me to have that facility available. (Which I may never be able to get again).

It's those that put their car on their home loan, (and being a depreciating asset) over 20 years or an extended period and end up paying far more in the long term, unless they are diligent enough to repay it within a reasonable timeframe, like a normal car loan.

[FTE217]

Nothing new though, there will always be a % of people who live beyound their means past present future and more so never listen to wise words of wisdom having something left in the kitty just in case........
Last decade and more as T3 mentions, applying for a loan through a bank/broker they need everything of your history etc, working for yourself you may have been able to fudge a few things but as an employee how can you doctor anything.
Back in the day of having cash/folding on the side was helpful for those who didn't have a high wage but that no more now that DD/electronic banking etc is taking over.

Anyway as said there will always be those you put themselves on the edge - luck comes into it, stability was there for so so long after the GFC, stock market plunges now and then, a war but overall it was ground hog day with such low interest rates for yonks.
Covid the next reset $h it happens and the merry go round starts again.

[Poetic Justice]

Wish my mortgage was $1300 a fortnight, lol!

[Yellow_Festiva]

Got back into the hunt late Jan as predicted and found a place I really like. Will be there to bid this Saturday.

I went to two auctions last Saturday out of interest and there was a decent crowd of spectators and a hand full of registered bidders.

Not one bid... nil, zip, nada... Nice places too, but vendors still wanting post Covid / pre rate rise numbers.

So what does the auctioneer do? Announce the (high) vendor bid as if it will make people bid.

The second auction was run by the same mob as the first one. His spiel was a joke:

"Ladies and gentlemen, don't be like the last auction where no one raised their card, only for it to feverishly be fought over post auction by 2 very interested parties".

What BS. Both properties are now listed as for sale. The 2 very interested parties must have landed equal blows in the fight and knocked each other out during negotiations.

At least they didn't advertise that it was "Passed in at $1,XXX,XXX" to imply there was bidding like they used to do.

Let's hope there are no bids this Saturday for me

[FTE217]

Originally Posted by Yellow_Festiva

Got back into the hunt late Jan as predicted and found a place I really like. Will be there to bid this Saturday.

I went to two auctions last Saturday out of interest and there was a decent crowd of spectators and a hand full of registered bidders.

Not one bid... nil, zip, nada... Nice places too, but vendors still wanting post Covid / pre rate rise numbers.

So what does the auctioneer do? Announce the (high) vendor bid as if it will make people bid.

The second auction was run by the same mob as the first one. His spiel was a joke:

"Ladies and gentlemen, don't be like the last auction where no one raised their card, only for it to feverishly be fought over post auction by 2 very interested parties".

What BS. Both properties are now listed as for sale. The 2 very interested parties must have landed equal blows in the fight and knocked each other out during negotiations.

At least they didn't advertise that it was "Passed in at $1,XXX,XXX" to imply there was bidding like they used to do.

Let's hope there are no bids this Saturday for me

Forgetting my previous post we have attended Auctions of late, more so supporting our son and daughter inlaw looking to buy their first unit for that was their budget pre Christmas..
Interestingly after all their research prior just last weekend we went to see 3/4 properties that now with pricing dropping 2 bed/2 bathroom apartments have come into their budget.

We went to an auction with them pre Chrissy for a unit they had hopes for but 2 bidders blew them out of the water counter bidding.
I suppose it all varies depending the areas.

What I find funny why do so many people turn up to auctions with no intention at all to bid, sure only 1 or 2 people will be serious but are there that many people hoping its bargain time ?!
What vendor agrees to sell so low unless they are really in the poop having to sell.
I hardly see or notice this kind of circumstance.
Can't agree asking pre covid figures from our experience to date, if they are the vendors are dreaming and hoping the sucker over looks everything else and willing to pay more that in the same area another property is 50/100k less for eg.......

[Yellow_Festiva]

Originally Posted by Yellow_Festiva

Got back into the hunt late Jan as predicted and found a place I really like. Will be there to bid this Saturday.

I'm effing ropable at the moment.... Went to inspection last weekend, told agent I was very keen and would go to the auction.

Instructed my solicitor to do their usual review and clarification of the contract on Monday. Monday afternoon vendors solicitor was sent a bunch of questions and amendments to the contract.

Agent called on Tuesday asking for follow up. Instructed then I was very keen and that I had already got my solicitor to get to work. Will be at the auction to bid next weekend.

No reply from the vendors solicitor by Wednesday morning so my side called to follow up and went to voicemail. No reply so she called again Wed afternoon and the secretary promised they would reply and call back when done.

Today - still no reply by 10am so I called the agent directly and asked them to get in touch with the owner to respond to my solicitor. Agent apologised and told me they would get onto it and call me back.

4pm - notification on the app "Under offer - Auction cancelled".

What an effing joke... Even it was obvious I was a very interested party not even a call to ask if I had an offer or if I could beat what was on the table.

4:30, final kick in the guts, money for deposit that was transferred into my account appeared, only for it to be returned to the account it came from 5 minutes later.

Oh well, back to the open houses I go...

[Citroënbender]

I’m honestly not surprised. I can understand your disappointment, but the conduct you describe is almost par for the course now. (What ethnicity of agency?)

If the vendors are also occupants why not pay them a visit to advise of their agent’s laziness?

[Yellow_Festiva]

Originally Posted by Citroënbender

I’m honestly not surprised. I can understand your disappointment, but the conduct you describe is almost par for the course now. (What ethnicity of agency?)

If the vendors are also occupants why not pay them a visit to advise of their agent’s laziness?

Nah, not worth my effort. Good luck to them. The whole thing stinks of an inside job. During the last open house the agent was obviously very good friends with one of the parties inspecting - talking openly about mutual friends, showing each other stuff on their phones etc.

Same agent I called Wednesday morning. She probably had a part in telling the vendor there was minimal interest and to accept the offer from her friend.

Who knows... Lets see if the cooling off period lapses. I may send the agent an email stating my interest should the sale fall through.

[MITCHAY]

There is a house just up the road from me that was advertised for I think $2.8m closer to $2.9m+ which has been reduced to $2.5m flat.

In either case I believe it will be both a suburb and district record if it goes for around that but that is a huge drop, maybe hoping to get in a multi bid situation.

[fordomatic]

I don't understand that conduct because it is the agents duty to get as much money for the seller as possible. More money they get, the more money they make. It makes zero sense that they didn't contact you.

[GO FURTHER]

Originally Posted by fordomatic

I don't understand that conduct because it is the agents duty to get as much money for the seller as possible. More money they get, the more money they make. It makes zero sense that they didn't contact you.

Yes and no... While an agent has the "moral" duty to get as much as they can for their client's property, in reality, they are sometimes lazy and just interested in making a quick sale and moving on to try and sell the next property.

They "pretend" that they are working in the vendor's best interests, but in reality, they don't really give a dam and only want to make a sale as quickly as possible to line their own pockets.

They put up the public "front" that they are working for the client, but they are actually working for themselves.

The other big factor in play is also the agreed commission they will receive on the successful sale of the property in the contract they have with their client.

There is no "set" rate of commission to sell real estate in Australia, and it is by negotiation between the client and the agent, which can vary widely from agent to agent and area to area.

For example... The average real estate commission rate in NSW is 2.1%. Sydney real estate commission rates range from around 1.8% to 2.5%, while in regional NSW the range is generally between 2.5% and 3.5%.

However, what further complicates this is also the commission structure.

There may be a "fixed" rate of commission agreed on the sale of the property once it reaches a certain price. Then an added incentive (or different rate of commission) for each dollar achieved over that. Called a tiered commission structure.

Sometimes, the extra commission an agent would earn from another buyer offer, over a sure unconditional offer (but slightly lower offer) they may already have in their hand, is not worth the extra work involved for the small extra commission they would get. (Lazy agents here).

The wealthier an individual agent is... The more the above factor may come into play, whereas the poorer agent may fight for every extra dollar of commission.

If the agent is on a set rate of commission and the property sells for say $2.8 million... A higher offer of another $20,000, may not be worth the agent's time and effort for that extra small commission they will make, over and above what he or she will already receive.

Their time is more profitably spent trying to sell another property on their list.

[Yellow_Festiva]

Originally Posted by GO FURTHER

Yes and no... While an agent has the "moral" duty to get as much as they can for their client's property, in reality, they are sometimes lazy and just interested in making a quick sale and moving on to try and sell the next property.

They "pretend" that they are working in the vendor's best interests, but in reality, they don't really give a dam and only want to make a sale as quickly as possible to line their own pockets.

They put up the public "front" that they are working for the client, but they are actually working for themselves.

The other big factor in play is also the agreed commission they will receive on the successful sale of the property in the contract they have with their client.

There is no "set" rate of commission to sell real estate in Australia, and it is by negotiation between the client and the agent, which can vary widely from agent to agent and area to area.

For example... The average real estate commission rate in NSW is 2.1%. Sydney real estate commission rates range from around 1.8% to 2.5%, while in regional NSW the range is generally between 2.5% and 3.5%.

However, what further complicates this is also the commission structure.

There may be a "fixed" rate of commission agreed on the sale of the property once it reaches a certain price. Then an added incentive (or different rate of commission) for each dollar achieved over that. Called a tiered commission structure.

Sometimes, the extra commission an agent would earn from another buyer offer, over a sure unconditional offer (but slightly lower offer) they may already have in their hand, is not worth the extra work involved for the small extra commission they would get. (Lazy agents here).

The wealthier an individual agent is... The more the above factor may come into play, whereas the poorer agent may fight for every extra dollar of commission.

If the agent is on a set rate of commission and the property sells for say $2.8 million... A higher offer of another $20,000, may not be worth the agent's time and effort for that extra small commission they will make, over and above what he or she will already receive.

Their time is more profitably spent trying to sell another property on their list.

Agreed 100% there.

[Yellow_Festiva]

Originally Posted by fordomatic

I don't understand that conduct because it is the agents duty to get as much money for the seller as possible. More money they get, the more money they make. It makes zero sense that they didn't contact you.

Yep... I have received text messages from other agents along the lines of "We just got an offer on XYZ property and owner is willing to sell prior to auction, please call us if you are interested in making a counter offer"

Thats what they should have done at a minimum, but oh well.

[Charliewool]

Originally Posted by Yellow_Festiva

Yep... I have received text messages from other agents along the lines of "We just got an offer on XYZ property and owner is willing to sell prior to auction, please call us if you are interested in making a counter offer"

Thats what they should have done at a minimum, but oh well.

Exactly what happened with the house we just bought…
Turned into a “dutch auction” between us and the other interested party that made the pre-auction offer..
Agent got every last cent out of us too (and kudos to him, would definitely use the same guy if I were selling!)

[hayseed]

Originally Posted by Charliewool

Exactly what happened with the house we just bought…
Turned into a “dutch auction” between us and the other interested party that made the pre-auction offer..
Agent got every last cent out of us too (and kudos to him, would definitely use the same guy if I were selling!)

Legend has it, that; Sometimes the Other Interested Party, Doesn't exist...

But as you say Kudos to the Agent for doing his Job..

[hayseed]

Most Agents are Lazy pricks.
Particularly Ones who've only being the Business the last 5-8 Yrs..Some Old school Agent who cut his teeth back in the '90s early 00's would've been playing everyone off each other & squeezing as Much as Possible out of You...

[jstanovic]

Just wondering why your lawyer is involved at all? Possibly the lawyer involvement put you into the too hard basket?
In saying that I've never seen an agent ignore a potential buyer either, usually the other way round!

For some reason you seem to get your fair share of agent issues...

[Yellow_Festiva]

Originally Posted by jstanovic

Just wondering why your lawyer is involved at all? Possibly the lawyer involvement put you into the too hard basket?
In saying that I've never seen an agent ignore a potential buyer either, usually the other way round!

For some reason you seem to get your fair share of agent issues...

Because I'm not a lawyer and when I'm paying over a million dollars for an asset that comes with a 50 page contract of sale it's absolutely imperative that you get a professional to look over the contract.

Often the T&C's are favored towards the vendor and they will sneak in clauses that don't benefit the buyer at all should things go south.

In this instance my lawyer found several clauses that needed rectification and the contract also had no inclusions added.

It's called due diligence... It can't be done after the auction when you have signed the contract.