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Banks target cashed-up expats...

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theasxgorilla

theasxgorilla

Problem solved... next bubble.
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We already have a thread about why we live abroad. This ties in nicely with that.

Traditionally its been relatively straight forward to buy European property from the UK and other places ie. the Swedes or the Brits or the Irish buying up property in lower-priced and superior-'climated' Spain. But to buy in Australia from these places has required that the purchaser arrange finance back home.

Now it seems that the big four are setting up home loan services in Europe for ex-pat wanting to purchase property back home. With the real kicker here being that the loans are priced in the local currency applying interest rates set by the local central bank!

Woo-hoo!

ASX.G
 
A lot of expats take advantage of the low interest rates in Japan (3.0 - 3.5%)to finance mortgages back in OZ.
 
..wow, that sounds (initially) like a fantastic option.

Has this been formalised yet? Where did you hear about this asxgorilla?

I'm guessing it may also have the effect of upping prices here, in good areas anyway.
 
bigt said:
I'm guessing it may also have the effect of upping prices here, in good areas anyway.
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I'd say that's the reason they're doing it... to stop happening here what has happened elsewhere. Because they know the property market is in trouble, as fewer and fewer people are prepared to/ can afford to, buy property.
 
theasxgorilla said:
We already have a thread about why we live abroad. This ties in nicely with that.

Traditionally its been relatively straight forward to buy European property from the UK and other places ie. the Swedes or the Brits or the Irish buying up property in lower-priced and superior-'climated' Spain. But to buy in Australia from these places has required that the purchaser arrange finance back home.

Now it seems that the big four are setting up home loan services in Europe for ex-pat wanting to purchase property back home. With the real kicker here being that the loans are priced in the local currency applying interest rates set by the local central bank!

Woo-hoo!

ASX.G
Click to expand...

In the 80's quite a number of Australian farmers went broke getting Swiss franc loans from Westpac if memory serves me right. Then the swiss franc tanked and their interest rates went up at the same time as their properties fell in value. Its one of the reasons I hold shares in banks. They are such a mob of bastards and know how to make money at the expense of clients.

gg
 
dhukka said:
A lot of expats take advantage of the low interest rates in Japan (3.0 - 3.5%)to finance mortgages back in OZ.
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I was poking around realestate.com.au and came to the conclusion that property prices in Aust are off the planet, especially when you consider that mortgage rates are at 8% and threatening to go to 8.5% over the next 12 months. But if you're in a zone that has much lower rates and is not likely to see higher rates over the next 12 months then property suddenly looks much more affordable!
 
theasxgorilla said:
I was poking around realestate.com.au and came to the conclusion that property prices in Aust are off the planet, especially when you consider that mortgage rates are at 8% and threatening to go to 8.5% over the next 12 months.
Click to expand...

Most unaffordable market on the planet according to the 3rd Annual Demographia International Housing Affordability Survey:2007, and would of got worse since this report was published.

The most pervasive housing affordability crisis is in Australia, with an overall Median Multiple
of 6.6. Affordability is only marginally better in New Zealand (6.0) Ireland (5.7), and the
United Kingdom (5.5). On the other hand, the national Median Multiple in Canada is 3.2,
indicating that housing is one-half as expensive relative to incomes as in Australia. The national
Median Multiple in the United States is 3.7.
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https://www.aussiestockforums.com/forums/showthread.php?t=1977&page=118
 
Here the article for those Interested ...

Banks target cashed-up expats

CASHED-UP Australian expats living in Europe are being offered special mortgages to buy property back "home'' as the big four banks combat the lowest domestic home loan affordability rates in more than two decades.

In the past, Australian banks have focused their expatriate mortgage services on Asia, but now recognise high disposable incomes in the UK and higher value foreign currencies can provide a niche boom in off-shore home loans.

Offshore mortgages can be set in the foreign currency earned, such as British pounds or the euro, with loans based on interest rates set by their respective central banks.

In the current environment, those foreign interest rates for repayments are lower than loans based on the Australian dollar.

ANZ has now joined the Commonwealth Bank, NAB and Westpac in operating a London-based one-stop-shop expatriate mortgage service, targeting Australians who want to invest or are considering returning to Australia.
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http://www.news.com.au/business/story/0,23636,22979860-14327,00.html?from=mostpop


Many will remeber in the past alot of Farmers etc went bankrupt borrowing in foreign currencys, something to ponder when considering this, guess it doesnt pose a problem if you continue to earn in the currency you borrow in.
 
This is another sign to me we are heading for a real estate problem like US and UK, sooner rather than later. Seems to signal Banks are desperate to prop up lending/real estate values.
I was Loans manager with CBA for 3 decades. Leaving aside exchange rate risk to clients there is an obvious danger that residents in UK, expats or not could easily be misled in regard what real estate values really are. I remember lots of clients loosing substantial amounts of money in past on highly advertised Queensland investment real estate for a start. Because of that several times in my career the Bank put a prohibition on borrowers in one state buying property in another, except where they applied at nearest branch to where property was being purchased. Of course in those days we expected clients to have a deposit as well, not like 100% plus finance deals STILL being done today.
While the astute can always find something of value, real estate as a whole in Australia is still overvalued, correction is only a matter of when. Till then i remain long on Oil/gas stocks on ASX.
 
theasxgorilla said:
I was poking around realestate.com.au and came to the conclusion that property prices in Aust are off the planet, especially when you consider that mortgage rates are at 8% and threatening to go to 8.5% over the next 12 months. But if you're in a zone that has much lower rates and is not likely to see higher rates over the next 12 months then property suddenly looks much more affordable!
Click to expand...

A 5% differential can definitely add up over the life of a 30 year mortgage. Some back of the envelope calculations:

a $250,000 mortgage, repayments of $1850 per month, @ 8% would take a touch over 30 years to pay off and cost $666,777 (principal + interest)

a $250,000 mortgage, repayments of $2000 per month, @ 3% would take about 25.5 years to pay off and cost $564,902(principal + interest)

That's a $100k difference.
 
dhukka said:
A 5% differential can definitely add up over the life of a 30 year mortgage. Some back of the envelope calculations:

a $250,000 mortgage, repayments of $1850 per month, @ 8% would take a touch over 30 years to pay off and cost $666,777 (principal + interest)

a $250,000 mortgage, repayments of $2000 per month, @ 3% would take about 25.5 years to pay off and cost $564,902(principal + interest)

That's a $100k difference.
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Why the difference in repayments/month $1850 vs $2000????
 
finnsk said:
Why the difference in repayments/month $1850 vs $2000????
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lol yes hell confusing comparison .... Heres another assuming 300k mortgage over 30 years .....


@8pc = 1,012 per fortnight, 492k in Interest paid over 30 years

@3pc = 582 per fortnight, 155k Interest paid over 30 years


Huge difference!
 
Sort of encourages foreign Investors to snap up the entire country eh? thank god for foreign ownership restrictions!
 
thanks for the information so far, i have a few questions though.

could i go to japan, get a loan off them to buy property in australia and then pay them back in australian dollars? this lets me have money at the lower japanese interest rate and i need to be mindful of the exchange rate.

would a foreign bank let you put up a share portfolio as collateral? i went to the bank not long ago to look at borrowing for gold/shares and it was all too much drama so i didn't bother.

not only japan, do any countries with lower interest rates have banks that lend out money to foreigners? higher interest rates are coming and i have confidence in the australian dollar so with globalisation / multinational banks / global economy etc. are banks offering loans that cross currencies?
 
disarray said:
thanks for the information so far, i have a few questions though.

could i go to japan, get a loan off them to buy property in australia and then pay them back in australian dollars? this lets me have money at the lower japanese interest rate and i need to be mindful of the exchange rate.

would a foreign bank let you put up a share portfolio as collateral? i went to the bank not long ago to look at borrowing for gold/shares and it was all too much drama so i didn't bother.

not only japan, do any countries with lower interest rates have banks that lend out money to foreigners? higher interest rates are coming and i have confidence in the australian dollar so with globalisation / multinational banks / global economy etc. are banks offering loans that cross currencies?
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Japanese banks will not lend you the money. It is off-shore banks (including CBA and NAB) but you need to be an overseas resident for the term of the loan. ie: when you return to Australia you are required to refinance. The Aussie banks will enforce this but I know there are others that don't.

Each bank has different criteria for finance but I believe you can only finance up to 75% with most banks so you need 25%+ cash to put into an approved property.. they won't finance anything it needs approval.

The biggest issue with foreign currency loans is the FX. You really want to be borrowing against a weaker AUD when drawing down the loan. If the AUD value of the property falls the bank will make a margin call meaning extra cash is required to top up the shortfall.

With the AUD at 15 year highs be very careful. The Banks have their bases covered so make sure you do as well.
 
rogue_investor said:
Japanese banks will not lend you the money. It is off-shore banks (including CBA and NAB) but you need to be an overseas resident for the term of the loan. ie: when you return to Australia you are required to refinance. The Aussie banks will enforce this but I know there are others that don't.

Each bank has different criteria for finance but I believe you can only finance up to 75% with most banks so you need 25%+ cash to put into an approved property.. they won't finance anything it needs approval.

The biggest issue with foreign currency loans is the FX. You really want to be borrowing against a weaker AUD when drawing down the loan. If the AUD value of the property falls the bank will make a margin call meaning extra cash is required to top up the shortfall.

With the AUD at 15 year highs be very careful. The Banks have their bases covered so make sure you do as well.
Click to expand...

Two weeks ago I attended a presentation in Chiba (that's next door to Tokyo) from an Irish financial services company ( one of the few foreign financial services companies that are registered with the Japanese Ministry of Finance). They mentioned the possibility of an expat mortgage. When I told them that I bank with Shinsei Bank (a Japanese Bank) they said that 's good because Shinsei is one of the banks they use for such loans.
 
dhukka said:
Two weeks ago I attended a presentation in Chiba (that's next door to Tokyo) from an Irish financial services company ( one of the few foreign financial services companies that are registered with the Japanese Ministry of Finance). They mentioned the possibility of an expat mortgage. When I told them that I bank with Shinsei Bank (a Japanese Bank) they said that 's good because Shinsei is one of the banks they use for such loans.
Click to expand...

Dhukka, I think you'll find that is for property in Japan but let us know how you get on.

Some of these financial advisers are working as mortgage brokers on local finance as they have the know how that many expats don't. Shinsei was one of the first to offer non citizens mortgages but all the big banks do it now. You just need to have the Japanese skills to get through the paper work.
 
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