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.

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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