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- 21 April 2014
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The thing is, if people took an interest only loan, they either couldn't afford it, or they were just gambling on a capital gain.
Or rather than paying principle and earning an after tax return of approx 4% (today's rates) they took the principle part of the payment and invested it elsewhere for a higher expected return.
They might know that they wouldn't be able to pay both the interest and the principle now..
That's a small scale ponzi scheme, with yourself and your banker.
If it works out well, that's great everyone's a winner, if it goes bad everyone is looking for someone to blame.
The bank calculates that they can afford to pay principle now, but allows them the flexibility/choice not to.
One could argue the whole financial system is a big ponzi scheme
Who really cares...as long as we find a way to use it to our advantage and manage risk accordingly.
I guess you are trying to say that if they aren't paying principle then they are not managing risk well.
But how far do you take it, should they be debt free before investing elsewhere.
Everybody has a different risk tolerance.
As long as it holds up a few more days......
Just signed the contract accepting an offer to buy my place half an hour ago. Now just hoping the buyer doesn’t cool off and does get their finance approved.
As long as it holds up a few more days......
Just signed the contract accepting an offer to buy my place half an hour ago. Now just hoping the buyer doesn’t cool off and does get their finance approved.
Put it online last week, first open home on Saturday, received an offer that was decent but a bit low, negotiated it up a bit and effectively sold that afternoon apart from the paperwork.That didn't take long Smurph, you must have priced it right.
Put it online last week, first open home on Saturday, received an offer that was decent but a bit low, negotiated it up a bit and effectively sold that afternoon apart from the paperwork.
Which makes now a good a time as any to post on ASF that I'm doing something very different both for work and life and won't be living in Tas or keeping the lights on any more. Some sadness in some ways, excitement in others, but everything has a time and quite simply everything just aligned and it all made sense.
South Australia here we come.......
Yes, that's what they told ASIC, APRA and the Royal Commission too.
Soon they'll pull an Alan Greenspan and tell the Senate hearing that they thought it was a good idea at the time to help the struggling aussie battlers out.
Property prices beyond the rental yield and generous tax allowances is pretty much a ponzi. Especially when it comes to residential property.
Well, unless you get creative, break a few council code and build, partition your rental however you like... to get the extra income.
That's not saying the ponzi will just collapse or wouldn't be profitable. Just investors or homeowner lucky enough to get in early, or get in late but managed to hang on through the bad years... it will work out because live do go on and population and economic growth do make property more valuable, eventually.
I won't be disappearing from ASF. Temporarily yes but not for long.All the best Smurph, hope you have enough time to put a few posts on the forum.
Is it a Ponzi or a simple case of supply and demand?
Property in mining towns went up as demand increased and supply didn't keep up. Then demand dropped like a rock and so did the prices.
And when they stop lending to the battlers...they will also be the villains as the battlers won't be able to get finance to buy a home.
People need to stop being victims and take personal responsibility. Maybe they should be required to undergo some financial literacy education prior to taking on financial products such as a mortgage.
At the end of the day it is just a product, it is up to the user to determine if it will be used for their benefit or not.
Is it a Ponzi or a simple case of supply and demand?
Property in mining towns went up as demand increased and supply didn't keep up. Then demand dropped like a rock and so did the prices.
Capital city property seems to always be in demand, as long as demand exceeds supply it will continue to hold up assuming those with the demand have the money or can get the finance.
Like most people there are relatively few things where I know with absolute certainty what the facts are.people should stop reading the news or watching it for a while
Yes the news industry has become a ridiculous parody of what it could and should be.Like most people there are relatively few things where I know with absolute certainty what the facts are.
Once I realised that the mainstream media rarely reported on these few subjects with accuracy I have simply assumed that they won't likely be reporting anything else accurately either.
Only reason I've watched TV news in the past 20 or so years is if either myself or someone I know is on it and even then I'm only watching to check the accuracy of how it has been edited etc. Same with newspapers.
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