Private housing finance increases

[Jovial Monk]

Home owner/buyers have made an increase in the amount of home loans the banks have written in Jan.

Thank you Messr Rudd/Swan!

[Ethnic]

Why not, it's only other people's money. Spend, spend, spend.

[mantra.]

Home owner/buyers have made an increase in the amount of home loans the banks have written in Jan.

That might be true - but the first home owners grant has pushed house prices up again for young people. Many of them are making the same mistake they've been making over the past few years - overcommitting themselves in a volatile market. They are still borrowing far too much and shouldn't be financially encouraged to buy new homes. The government - if it has to give these enormous grants - should give an incentive to young people to buy older, less expensive homes as their first purchase. Leave the new homes to those who can afford them.

Rudd is trying to follow Howard's line of economics and encouraging an overcommitment by those who if they suddenly become unemployed, can no longer afford their mortgage repayments.

Small to medium businesses are having difficulty borrowing and getting credit - yet an individual with little or no security can still overcommit themselves with a ridiculous mortgage. Weren't stricter lending regulations supposed to be put into practise - although why should the banks care - all their losses are government guaranteed, including foreign investments.

[Ethnic]

Exactly mantra. We're supposed to be stabilising house prices so that young people can have a chance at owning a house. This is making matters much worse than they should be. Unfortunately these people, who can't save for shit, take other people's money to buy a house for way more than it's worth. When will the madness end? If you are too stupid to save your own money for a decent deposit on a house then how the hell are you going to pay the fucking mortgage off? Fuck you Howard and Rudd, thanks for fucking everything up.

[Jovial Monk]

Celetina, we are in a recession. houseprices are headed down. We could, like Lefty said in the Sandpit, just let house prices crash! that would create lots of fear, bankrupticies etc.

The FHOG Rudd announced will ensure an orderly retreat in prices. As lefty further said, banks are being extremely stringent in their lending requirements.

[Jovial Monk]

Rudd is in no way following the Rodent's line on anything!

[Ethnic]

I hope they do go down but it's hard to see it. In Adelaide house prices are still rising. Nobody learns anything. The fat cats can get even fatter. Meow!

[mantra.]

This is a post from Leftofcentresalterego - copied from the sandpit.

.............................................................................................................................................

encouraging an overcommitment by those who if they suddenly become unemployed, can no longer afford their mortgage repayments

That's a fair point Mantra. But I think that in the context of today's situation, it is part of the overall strategy along with the stimulus package to try and minimise the occurence of that sort of thing.

There are quite a few businesses and jobs tied up the housing industry. A rapid contraction would see many go to the wall and large numbers of workers end up on the dole.

Banks lending criteria have become much tighter - they are demanding bigger and bigger up front deposits and I think it's likley that even with the FHOG we will see the number of home loans slide as the year progresses. My mother works for a conveyancing firm and she is witnessing a record number of deals fall over as interested buyers keep signing up - only to find that the bank says no to the finance.

House prices of course need to come down, they are far too expensive but they need to come down in a steady, orderly fashion. If they simply collapse they result will be more business bunkruptcies and more jobs lost.

Rudd may be doing the same thing as Howard re FHOG but the situation is completely different. Howard was grossly irresponsable by throwing money at home buyers during a boom - he must have known that this could only serve to fuel demand and push up prices even further. It was pork. Rudd by contrast is doing the same thing but at a far more appropriate time - at the onset of a slump. If house prices contract too rapidly the industry will collapse.

The difference is all in the timing.

[mantra.]

Banks lending criteria have become much tighter - they are demanding bigger and bigger up front deposits and I think it's likley that even with the FHOG we will see the number of home loans slide as the year progresses. My mother works for a conveyancing firm and she is witnessing a record number of deals fall over as interested buyers keep signing up - only to find that the bank says no to the finance.

I'm not sure if that's the case Lefty. I know two young couples recently who have borrowed massive sums for their first home with only a 5% deposit. Their mortgages are a ridiculous size compared to their incomes & other financial commitments and although the interest rates might be low at present - we know they never stay that way.

[mantra.]

From Leftofcentresalterego...

..........................................................................................................................................

I know two young couples recently who have borrowed massive sums for their first home with only a 5% deposit

It was only last year that no deposit home loans were the rage. It may still be possible to get them but as of November last year, the Commonwealth bank announced that it would no longer offer such loans.

I can assure you that at least in this neck of the woods, lending standards have grown much tighter. My mother is near retiring age and will likely go if things do not pick up in order to preserve the younger clerks jobs. She can afford to retire. Many conveyancers have cut hours or shed jobs.

I see much anecdotal evidence of a slowing or slumping housing market - including my grandfathers house. They keep dropping the price but to no avail. It looked like it was sold last week to a young couple, but it fell through - the bank said no to them.