Monthly Archives: October 2017

Reserve Bank of Australia now concerned

I don’t have to write anything except Google RBA concerned about Mortgage Stress, interest only loans and top down stress testing of the Banks.

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Sydney Siders’ Sliding

It’s being widely reported and my friends in Sydney who “know the market” attest to a slide in Sydney’s astronomical property prices.  People are getting the jitters.  The smart money has already “left town” and has found a home in the stock market, gold and other hidey-holes.

I was chatting recently with a couple in their early thirties – we started a conversation at a local coffee shop.  They were wondering what to make of rumours of interest rates about to go up.

They confided that they had a $400,000  “VIP” type loan through a Broking House on their principal place of residence.  They had an electronic copy of their contract so I took a peek.  Just as I thought – another “Interest rate holiday” that will be clawed back by the Lender in Years 4 and 5.  Poor people had no clue.  They hardly understood what I was telling them.

Their repayments NOW are $1,833.00 per calendar month, interest only.  By the time Year 4 comes around, very conservatively, interest rates will be at least 1 percent higher than they are today.  Years 4 and 5 come with an extra sting in the tail.  Their repayments will revert to Principal and Interest at “1 percent above market rate”.

I got into a Mortgage Calculator.  Their repayments will jump $642.00 per month or by 35 PERCENT.  I thought the poor dears were going to faint.  “But, but, but…..”  they stammered.

They bought me a coffee, said “thanks” in a wheezy, incoherent sort of way, and walked, leaning on each other, toward the beach.

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