Westpac had slashed the maximum loan to value ratio (LVR) for residential property loans taken out by self managed super funds (SMSF) to 70 per cent.
Earlier last month, Westpac lowered the maximum LVR for all property investors to just 80 per cent. On Friday, Westpac also announced it will increase investor mortgage rates by 27 basis points to appease the banking regulator.
In May, NAB quietly exited residential mortgage lending to the SMSF market, choosing no longer to lend to this higher risk limited recourse segment.
Chris Foster-Ramsay, managing director of Capital Home Loans told the Australian Financial Review, “Doors are being shut on SMSF lending for the immediate future. Clearly, someone can foresee a problem.”
The problem the banks foresee is irrational investors who have paid too much for properties in a heated market and many who may not be able to service the loan due to plunging rents. As SMSF loans are limited recourse, there is little to no collateral for the bank.
The Australian Financial Review suggests some off the plan buyers are finding out at settlement their properties are valued at 20 per cent less than what they paid, and rents are 20 per cent less than what agents had spruiked. The paper cited one example, Scott Thornton who was forced to sell one of his apartments for a $150,000 loss after two years because he couldn’t find a tenant required to service his loan.
A surge in property investors to record levels has seen an increase in the supply of rentals, leading to falling rents and vacant investment properties. Yields are also being eroded as many investors simply paid too much for the property in the surging market.
» Westpac slashes loan ratios on SMSF investment properties – 31st July 2015.
If you were a “have” the why would you not want a replay of the US GFC in Australia. It is a winning script!
First you lock in the sheeple and bleed them dry with cheap loans.
Then you package the toxic loans into credit instruments and “rip investors eyeballs out”
Then when it all goes tits up you shift all the losses back onto the taxpayers LONG after you have extracted all the wealth.
Now the poor avg Joe is so on the hook that they are a mere puppet.
Tried and tested in the rest of the world. People are too dumb to even realize what is happening, even the halfwits can be distracted with stories of boats and IS.
Given the personality of Aussies, Australia will go out(or on) with a whimper, not a bang;)
@ 3s
Read “The creature from Jeckyll Island”
What you predict is explained and more.
@3s
Absolutely correct and as the Ex Fin Min of Greece put it “A takeover by Banks instead of Tanks” Just think of central banks plus the major global banks as Gigantic Hedge Funds that co-ordinate to do leveraged buy-outs of countries. Once control is established with overwhelming debt, the asset stripping begins as they acquire REAL assets for cents on the dollar. In other words a bloodless coup that transfers all wealth to the top 1% and enslaves the people.
3s: don’t forget the bit where you end up owning all the foreclosed properties, and also get to swoop in at market bottom and buy up whatever you want with zero interest cash provided by the government that no-one but you can access.
It’s one humungous pump and dump. The debt-heads are in trouble and they have no idea of what’s coming.
Read and weep….
http://www.macrobusiness.com.au/2015/07/australia-land-of-the-lie/
Yeah but the debt-heads have just gotta keep up with all the other debt-heads
@4. LordDudley
“It’s one humungous pump and dump.”
There are 2 types of people, those who don’t understand it and those who are screaming like crazy. There are a lot of well to do folk that belong on the end of a pitchfork for this, but from observation this doesn’t happen. They’ll use our tax dollars to protect themselves.
Australia is a BANK colony.
“The Australian Dream you have to be asleep to believe it.” George Carlin called it the American Dream,same script here in OZ.
@Chokolate
You are right about 2 types of people. Most take the Blue Pill and prefer to live in blissful ignorance. The few who take the Red pill are destined to live in a painful reality as they realise the extent of the Banking Matrix and how it affects their lives. What they must learn is that the cartels cannot survive without their input but they can prosper without them.
Judging by the number of million dollar fines paid by the Global Banks for financial crimes what are the chances our banks are also involved in major crimes. How about money laundering from Asia or perhaps loan fraud. Maybe capital punishment for bankers would be useful.
http://www.caseyresearch.com/articles/theres-a-good-chance-your-bank-is-committing-a-major-crime-right-now
The reality is that the people who borrow are slaves.The style of government does not really matter because whoever controls the banking system are the modern slave traders.The debt burden will destroy economic activity and ruin the lives of millions of people.The purpose of banking is to destroy the lives of the people.Interest and compounding interest destroys all economies.
The real outrage should be that the income tax exists at all.And the reason it is a slave tax is because most people must work in order to support themselves.Thus,any fruit of their labour should be theirs and theirs alone.Men,women and children are not property of the state.They are born with a gift from God which is the ability to work and to earn their keep.The income tax takes away that gift from God and attempts to put all of mankind under a form of slavery.Income tax takes money from one group of people such as the producers and then gives the money to the suckers or non producers.This is done under the threat of violence.If the income tax is terminated,the economy would recover,families could support themselves and unemployment would disappear.The purpose of income tax is to make “wage slaves” of the people for all their working years.So, until we stop accepting our own slavery,the same old things will continue.
@ Morpheus,
Well said.
prepper
Now the payday lender has severed ties.
Is this a sign they can see down the track that family with the 6 Br home and the Hawaii holiday might just be hocking the plasma next year and don’t want to find themselves lending to some fool whom already defaulted with them?
Just a thought..
Gilad Atzmon. “In the west in the last 50 years there has been a collapse of manufacturing partially because of automation, machinery and computerization but also because Milton Friedman taught us that it is better to be a service economy.The meaning of it in America,Britain,France,etc. is that we don’t need working people.The people who used to be working class are now workless class,and they are doomed to poverty with no hope,they are called under-class.As things stand,existing jobs demand very high cognitive ability(very high IQ) such as engineers,financiers,bankers,PRs.This group of privileged people is what I call the “cognitive elite”, and they are few in number.We live in a society where we witness the under-class growing rapidly and a small cognitive elite maintaining it’s power.When it comes to the under-class we realize that there are a lot of immigrants.They are the primary sufferers of the new cruel, merciless division not between the rich and the poor but between the able and the less able.It is very devastating.
I saw this on the news tonight, although not mentioned in the article they are about to review at least another 460 (iirc) more purchases. who knows maybe this will just be the tip of the iceberg of things to come.
http://www.skynews.com.au/news/top-stories/2015/08/08/treasurer-orders-sale-of-six-homes.html