UPDATE 11 FEBRUARY 2014

Funny how you pick up on things.  Talk of First Home Buyers rushing into the market before the prices rush upward yet again, pricing them forever out of the market.

I keep seeing a market that is stuffed and on the verge of cataclysmic correction – butchered, hyped and manufactured figures and people, real people, losing hundreds of thousands of dollars.

I see an ‘economy’ supposedly on the way up, yet I talk to dozens of small and medium enterprise operators who are collapsing through sheer exhaustion trying to keep up with costs as sales dwindle.  Just take a look at new car sales for January if you want an idea of how crap the sentiment is out there.

Then out of the blue comes a RAMS Home Loan advertisement showing that silly old sheep following a rather fetching young lady into a lounge room as her grungy flat-mates sleep off another bender.  There’s a kinda creepy aspect to that part of the ad – but I’ll leave any interpretation up to you dear reader.  Moving along and the ad goes down the predictable path of “I didn’t realise how easy it would be to ONLY have to have a 5 percent deposit”.  Not to dwell too much on THAT little number, they fail to mention the EXORBITANT COST of Mortgage Insurance if you ONLY have a 5 percent deposit but that’s yet another story for another time. (Sorry but HAVE to go there – well say they want to buy a 400k house-saved 20,000 deposit – the Lenders Mortgage Insurance could be as high as 14,000! That works!)

The kicker for me comes when the ad proposes dearest MUM and DAD be asked to put THEIR home up as security and the non to subtle suggestion is that you can get into your own cliff-edge depreciating asset with even LESS deposit.  Couple of things here.  Encouraging youngsters will poor savings habits to mortgage themselves to the hilt early – they’ll be bad payers and will lose their house.  But, more sinister than that – I bet RAMS (and others in the know) will actively seek to cross collateralise loans so that when the correction comes, RAMS and the rest can grab and sell TWO PROPERTIES to recover their money rather than just one which has lost all its equity in a heartbeat.  two families on the street instead of one – the kids can’t even move back in with Mum and Dad because the big nasty lender has taken BOTH properties.

There endeth the cynical viewpoint for today!  Cheers – Gordon

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