# RAMS fails to refinance - serious implications for housing market?



## numbercruncher (16 August 2007)

RAMS share price plummeted today ....



> Australian mortgage lender RAMS Home Loans Group said on Thursday it had to extend the refinancing period for $6.17 billion in maturing notes which it was unable to refinance them.




http://www.smh.com.au/news/business/rams-plunges-after-refinancing-failiure/2007/08/16/1186857643671.html


So it appears to me that the credit crunch is well and truly embroiling our market.

RAMS has hundreds of thousands of customers who will now be forced to pay higher Interest rates regardless of the "offical" rate according to some commentators.

Rams listed only a few weks ago at 2.50 now about .80 ----


This is surely going to show in House prices in coming months and years ?


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## sleeper88 (16 August 2007)

*Re: RAMS fails to refinance - serious implications to housing market ?*

bugger!!...a quick solution..shift rams across the tasman..and let the sheeps deal with em


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## BradK (16 August 2007)

*Re: RAMS fails to refinance - serious implications to housing market ?*



sleeper88 said:


> bugger!!...a quick solution..shift rams across the tasman..and let the sheeps deal with em




I thought rams dealt with sheep


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## Fleeta (16 August 2007)

Anyone think Rams is a serious baaahhhgain at the moment (ok, that's a bad pun)! Their prospectus had a forecast EPS of 16c for 2008 and a dividend yield of 5.8% based on their float price of $2.50. Assuming those figures hold, they are looking at a P/E of 5 and div yield of 17%!!! Anyone know if the prospectus figures are now seriously misstated? Even if they miss by 50% it is still an 8.5% yield. Is it that bad or are people spooked?


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## wayneL (16 August 2007)

Fleeta said:


> Anyone think Rams is a serious baaahhhgain at the moment (ok, that's a bad pun)! Their prospectus had a forecast EPS of 16c for 2008 and a dividend yield of 5.8% based on their float price of $2.50. Assuming those figures hold, they are looking at a P/E of 5 and div yield of 17%!!! Anyone know if the prospectus figures are now seriously misstated? Even if they miss by 50% it is still an 8.5% yield. Is it that bad or are people spooked?



A perusal of the US mortgage sector fundamentals may be a window to the future. 

Earnings forecasts were plucked from their ****


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## numbercruncher (16 August 2007)

hehe i guess if they fail to get finance theyll just become another flash in the pan and someone else will inherit their loan portfolio ?


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## Agentm (16 August 2007)

i'll loan them some cash..

how much do they need?


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## chops_a_must (16 August 2007)

Agentm said:


> i'll loan them some cash..
> 
> how much do they need?



$6b


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## Agentm (16 August 2007)

ohh!!

umm.. i'll ask around then!!


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## Fleeta (16 August 2007)

wayneL said:


> A perusal of the US mortgage sector fundamentals may be a window to the future.
> 
> Earnings forecasts were plucked from their ****




Earnings forecasts are signed off by an independent expert though. Wouldn't there almost be grounds for people who bought into the prospectus to sue them. Or is that why they have the 'risk factors' section? If I bought into this IPO I would be bleeding! Lucky for me, I stick with resource specs...yeah, cos they haven't been hammered


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## Kathmandu (16 August 2007)

Rams gave me the thumbs up for more $$ this arvo, 
seems they still have some for some of us.

Dave


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## numbercruncher (16 August 2007)

It doesnt worry you that they finance out of the US and you may get rate rises over and above the reserves raises here?

I would imagine this whole thing will send more business to the big four.


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## Kathmandu (16 August 2007)

numbercruncher said:


> It doesnt worry you that they finance out of the US and you may get rate rises over and above the reserves raises here?
> 
> I would imagine this whole thing will send more business to the big four.





Not at all, I am borrowing to help finalise a build I am doing, a few % points is neither here nore there in the scheme of thing's.  This build has picked up over $120k in additional equity over and above the dollars I had origanaly budgetted (conservative bank val) in 7 months, on a $400k build inc land.

(Aren't R.E. prices stagnating?)

2% extra will only be a couple of grand over 12 mth's, house will be done and sold in 6 mths.

Didnt want to use equity from other IP's so chose to continue with No Doc.

NO Doc  LOC borrowing by a responsible borrower.

The cost of doing business, and ensures that there are no surprises in store.

Dave


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## Mofra (16 August 2007)

Nobody in the mortgage industry will touch them - the forecasts we done on the basis of average profitability margins on their total loan book.

Problem was they spent 18 months writing unprofitable business so when they needed to have the forecasts done (and of course, sell themselves to "sophisticated investors") they were calculated on an inflated book of sub standard quality.

FWIW once a loan is securitised in Australia it generally does not have to be constantly fed by short term bond issues - we operate very differently to the US so only new business at lower credit ratings is being hampered (secured loans are generally done so in Australia over the life of loan).

Which of course brings us back to RAMS writing unprofitable business again, impacting on their ability to raise higher credit bonds & debentures.... so the merry-go-round begins...


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## numbercruncher (16 August 2007)

wow huge return, where are you building ?


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## Kathmandu (16 August 2007)

numbercruncher said:


> wow huge return, where are you building ?




What does it matter, property market is flat and will be for years, all us fools in property will do our dough, and no one can afford $600k for a new home 

Why would you be intersted.?

http://www.realestate.com.au/realestate/agent/l.j+hooker+rockhampton/xljroc/page2/104138952

A few doors away and plenty flasher ones coming up.

Dave


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## numbercruncher (16 August 2007)

Hmm ive never quite worded how you have but anyhow .....


I do find it ridiculous that you can buy a block of land in Norman Gardens for 200k whack a 200k house on it and expect to get 600k.

I guess Rocky has come a long way lately hey ? 

Are people really that lazy and clueless that they cant organise building a house themselves ?


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## BJP (16 August 2007)

*Norman Gardens*

I`ve got a house there, not to far from Nagle St, paid 68k in '89, then bricked in under, put in driveways, fences, within 12mths of buying, doing ok now


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## numbercruncher (16 August 2007)

Example Kathmandu


you can buy this 1800m2 block in your Norman Gardens estate for 230k

http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=2387730&f=10&p=10&t=lan&ty=&fmt=&header=&c=51980495&s=qld&tm=1187268782


then you can build this 2 story Dixon/Tamawood 28sq home for 160k

http://www.tamawood.com.au/plansearch/searchresults.asp?numbeds=0&numstoreys=2&numbathens=0&pricerange=0%2C100000000%7C0&numgar=2&txtwidth=0%2C999&txtFrontageMin=0&txtFrontageMax=999&numrumpusfamily=-1&txtlength=0%2C999&txtLengthMin=0&txtLengthMax=999&slope=0&dimensions=250%2C300&txtDimensionsMin=250&txtDimensionsMax=300&FrontageRange=0%2C999&specification=0&company=0&desreq=&sub_id=4U0RTRJE&franchise=0&RGN_ID=4Q0W4BG9&Desname=&OrderBy=

Then spend 60k on flooring, drives, Gardens,pool etc


And after all that you have 150k leftover to buy a Merc a landcruiser and a new Harley and perhaps some shares in RAMS - Not to mention a much bigger block and house  !

Good luck on the 600k price champ


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## Kathmandu (17 August 2007)

numbercruncher said:


> Example Kathmandu
> 
> 
> you can buy this 1800m2 block in your Norman Gardens estate for 230k
> ...




I dont think people are clue less and lazy here, but if someone lob's in with wife and kid's working at the mines, there is no accom. available for them, they are on big money so they set them up in a flash new house in town. They cant afford the 12 mth wait for land and build, and want new, new ,new.

quote
*I do find it ridiculous that you can buy a block of land in Norman Gardens for 200k whack a 200k house on it and expect to get 600k.*

I find it ridiculous as well, but I thought the same 3 years ago buying $60,000 houses on 2 titles and building small lot low set brick.  House $120k, Land $30k/block  sell$270k ( I have held a few of these as rentals getting $280/week)

Yep, seen that block, been on the market for ages.

Try getting someone to do the earthworks, try getting someone to build on a less than perfect block.

Two storie  home  now that is funny.  Have tried to get builders up here to do small lot 2 stories like I do in Brisbane  for the last 5 years and no one is interested, well not for realistic money anyway.

Dixon, way to slow up here, the last lot of houses I did were done in less than half the time, better design and cheaper than what dixon could provide.

4 bed low set brick or nothing here, only just starting to see render and skillion roof's

$600 aint my number, but that's what the agent reckons, I spose if someone want's to pay !!!!!

$460k is smiles all round for me

Houses have been selling for $500+ in Norman Gardens/The Sanctuary previously, so "apparently" people will pay extra for the Fibre optic network in this estate.

Plus there is a severe "flat land" shortage in town, and the perception is that 5 klm out is the end of the world.

All the big yellow buckets are scrapping out the hill up the back for the next lot of $300k blocks and apparently ??? there are "Sky view" blocks for $400+, just the land.

I wont be buying, but then i'm not on big miners money.

Dave


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## Kathmandu (18 August 2007)

Heres one of those "High Set" homes you were on about numbercruncher.

Nicely nestled under some powerlines by the look of it as well.

http://www.century21.com.au:80/property.cfm?grplstno=QLD9513178&officeSite=Y&grpofcecode=QLD95

Dave


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## Flying Fish (18 August 2007)

Good luck buddy, too bad if the mini ng industry starts to falter and no one buys it :-(


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## Kathmandu (18 August 2007)

Flying Fish said:


> Good luck buddy, too bad if the mini ng industry starts to falter and no one buys it :-(




Negative bunch eh!! 

Even if the mining industry does falter it will still sell, that's the beughty of Rockhampton, it's not just mining.  It was on the move here well before the mining got close, not that it is now, still 4 hours to site.

If it sells a bit under ask, well I've still made more than the lightweights that don't have the balls to get into the market.

And as to your comment, same for your mining stock's.

Dave


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## Flying Fish (18 August 2007)

I am not knocking you, just stating a possibility thats all. Its called open mindness, the reverse could also be true. Hope you do well, and good on you for giving it a go !!


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## Kathmandu (18 August 2007)

Flying Fish said:


> I am not knocking you, just stating a possibility thats all. Its called open mindness, the reverse could also be true. Hope you do well, and good on you for giving it a go !!




Well thanks for that FF, hard to pick the tone of posters on line at times.

This will be my last one here for this cycle, me feels the market is getting peaky, infact I felt that way 6mths back, but they keep lining up for more.

May do something in Bris.

May sit on my hand's for a while as well.

Plenty of lookers down the road at an "open house" at the moment, will be interesting to see how long to sell and how much.

Dave


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## Flying Fish (18 August 2007)

Great. Have a good weekend.


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