The future of Australian property prices

[numbercruncher]

Dude no need to bury your head in the sand screaming denial - its happening and the banks are spending millions to try stop the flow becoming a flood ...

Finance industry giants are spending millions of dollars on legal fees fighting homeowners who have successfully exited their mortgages because they were stung by sub-prime-style lending practices during the last property boom.

An investigation by The Australian has revealed several mortgage providers and mortgage brokers engaged in improper lending practices in the years before the global financial crisis hit in 2008, including inflating borrowers' income and ability to repay debts to secure so-called "low-doc" loans.

Ms Brailey, who has been tracking low-doc loans and loan application issues with The Australian for several years, said she had uncovered examples of loan application irregularities in loans approved by 14 banks and other lenders.

She obtained emails illustrating imprudent lending practices by 36 banks and non-bank lenders, including all of the major banks.

"We're about to see a major train wreck," she said.

http://www.theaustralian.com.au/news/investigations/hope-for-mortgage-victims-as-homeowners-winning-battle-against-banks/story-fn6tcs23-1226382076020

Pretty reputable source ....

 

[jank]

I'm bearish on Australian property as I have said before on this thread but the person who borrowed huge sums of money that they cannot pay back at all is also responsible. To blame it all on the banks is just shifting responsibility on to someone else. I have heard it all before in Ireland.

If you borrow too much and cant pay it back then who's fault is that? People need to learn personal responsibility.

 

[young-gun]

I'm bearish on Australian property as I have said before on this thread but the person who borrowed huge sums of money that they cannot pay back at all is also responsible. To blame it all on the banks is just shifting responsibility on to someone else. I have heard it all before in Ireland.

If you borrow too much and cant pay it back then who's fault is that? People need to learn personal responsibility.

Yes, but a key point that everyone seems to be forgetting here is that people are stupid. If you let them take out a million bucks on 50k a year some will. I'm not covering for people's stupidity, they are just as much at fault, but the banks have the ability to stop such decisions taking place to begin with. Not to mention you have a generation of bulls screaming at the top if their lungs that property never goes down, coupled with the media banging on about ut for years, and you can understand why some unsuspecting families want to try and get into the market sooner thn they can afford.

 

[Glen48]

People worldwide think the same that's why this is now a global greed problem not just buying property but consumerism to the hilt,new cars,white goods, electronics,house renovations now its time to pay the piper and every one is broke

 

[Starcraftmazter]

I'm not at all defending inappropriate lending. It's despicable and stupid.
But I'm just sick of no blame being attributed to the person acquiring the loan. Do you really believe the borrower had zero responsibility?

How about putting some responsibility on governments - ALP and LNP for shoving massive incentives down people's throats to speculate on property?

 

[CanOz]

SCM, in your data cache do you happen to have any data on which australian banks are most exposed to these subprime loans?

Thanks for the info...

CanOz

 

[Starcraftmazter]

SCM, in your data cache do you happen to have any data on which australian banks are most exposed to these subprime loans?

Thanks for the info...

CanOz

Unfortunately not. It is irrelevant too in my view - and the reason is that there is no possible way to know which loans are subprime until the recession kicks in full blast and people start losing their jobs en mass.

The worst loans are written during the best of times.

 

[prawn_86]

Unfortunately not. It is irrelevant too in my view

But wouldnt it make sense to short the bank with the highest exposure? This is a stock forum after all and shorting stocks is a legitimate way to make money

 

[CanOz]

Unfortunately not. It is irrelevant too in my view - and the reason is that there is no possible way to know which loans are subprime until the recession kicks in full blast and people start losing their jobs en mass.

The worst loans are written during the best of times.

Curious because most of our money is now in Canada and China, might pay to wait a while and see how this pans out before we repat it...

CanOz

 

[Starcraftmazter]

But wouldnt it make sense to short the bank with the highest exposure? This is a stock forum after all and shorting stocks is a legitimate way to make money

Certainly, but as I said - there is no way to know based on any official figures, disclosures or other releases.

One idea is to get someone with a bad credit rating and have them apply for an equally valued mortgage with the 4 major banks and see which ones will give him the money. That I imagine would be a solid experiment.

 

[Starcraftmazter]

This is quote relevant to my points in the last two pages:

So, what is the wash up of the last few days of this debate? The Government’s senior bureaucrats have conceded that there will be no revisiting the 2008/9 stimulus package in the event of a global recession. Only the automatic stabilisers will be allowed to run the Budget into deficit. The principle ratings agency, S&P, has declared that that won’t be enough to prevent a downgrade of the sovereign. So, in the event of a global recession, we have lost both the ability to provide active counter-cyclical fiscal support and the efficacy of monetary policy has been damaged.

http://www.macrobusiness.com.au/2012/06/is-australia-the-next-spain/


This means that not only will there not be a FHOB again which propped up the bubble during 09-10, but our AAA credit rating - and thus our banks' ability to borrow is hanging on by a thread.

 

[jank]

Yes, but a key point that everyone seems to be forgetting here is that people are stupid. If you let them take out a million bucks on 50k a year some will. I'm not covering for people's stupidity, they are just as much at fault, but the banks have the ability to stop such decisions taking place to begin with. Not to mention you have a generation of bulls screaming at the top if their lungs that property never goes down, coupled with the media banging on about ut for years, and you can understand why some unsuspecting families want to try and get into the market sooner thn they can afford.

Yes people are stupid, but so what. There is a reason why some people end up at the bottom of the pile, because of bad personal decisions. Should we legislate against stupidity? Make it illegal to be stupid, so no matter how stupid a financial decision you take you are not responsible at all? Also, if a bank gives a person $1 million who earns 50,000 a year then they are also stupid.

 

[prawn_86]

Also, if a bank gives a person $1 million who earns 50,000 a year then they are also stupid.

Exactly, and yet they ended up getting bailed out with taxpayer funds. They get an out for stupidity, why shouldnt stupid individuals do everything they can to try and get bailed out for their stupidity?

 

[Glen48]

The stupid ones are the feds world wide who guarantee the banks they can't fail and they know that, the ones who volunteered to bailout the banks have no say in it and banks are seen as some sort of God to be worshiped by the feds.

 

[jank]

Exactly, and yet they ended up getting bailed out with taxpayer funds. They get an out for stupidity, why shouldnt stupid individuals do everything they can to try and get bailed out for their stupidity?

Which bank in Australia got bailed out?

 

[prawn_86]

Which bank in Australia got bailed out?

I was referring to the trend in Western societies in general. The banks in Aus did get the gov guarantee (backed by taxpayer funds) and also had access to overseas TARP funds i believe

 

[Glen48]

Nab and CBA under TARP wait a few more months and see how it will pan out once ex-home owners walk.

 

[CanOz]

Governments bail out banks, then bail out consumers by providing mortgage assitance as well. This is a global hangover tat will take years to unwind.

Canadian banks are highly regulated and yet even there they have issues with property bubbles.

There are no safe havens anymore...no place to hide.

CanOz

 

[im sparticus]

What percentage of oz morgages are affected by this and what percentage of the oz property market as a whole do said morgage holders make up?

 

[Ves]

Dude no need to bury your head in the sand screaming denial - its happening and the banks are spending millions to try stop the flow becoming a flood ...






http://www.theaustralian.com.au/news/investigations/hope-for-mortgage-victims-as-homeowners-winning-battle-against-banks/story-fn6tcs23-1226382076020

Pretty reputable source ....

Would not be the first time a newspaper has covered a story like this and nothing material has eventuated? No reason to think it will be any different this time. Thanks though. A shame australia has very little decent media coverage.