The Blogs that appear on this page may be sourced from outdated material so please seek appropriate professional advice. The blog material is in no way intended to be personal financial planning advice.

Catherines Chat

Wholistic Financial Solutions provides a lot of essential information and updates regarding the property investment industry. Check this page for the updates.

Whats really going on with the Banks and Property Market?

Friday, October 30, 2015

So what’s really going on with the banks and the housing market?  It’s complicated to explain but when banks assess loans they use what they call a ‘servicing interest rate’.  So even if the loan is at 3.99% the banks use a different rate to assess the loan and the banks are being ridiculous and using rates like 9.5%.  This is no reflection of reality – as in the banks don’t think rates will go this high.  What they are doing is playing a chess game on behalf of the government with us borrowers as the pawns.

 

The Government is concerned about the ‘property boom’ happening and are trying to slow it down.  This in itself is ridiculous as the so called ‘property boom’ is limited to Sydney and Melbourne.  As we in Canberra know, it hasn’t happened here, that’s for sure.  And similarly Brisbane has only just started on the incline.

 

So…. Governments normally raise interest rates to combat property booms but they can’t do that this time because fundamentally the Australian economy like the rest of the world is not looking so healthy.  If they raise rates – they could sink Australia.  So instead of sitting back and letting the markets do what they should do, as in correct themselves, they are using borrowers as pawns and putting pressure on banks to make borrowing much more difficult. 

 

They are also putting pressure on Valuers and valuations are coming back ridiculous.  I just had a property value come in $140,000 under value as to what the purchaser was willing to pay.  I have never in my life seen this happen as a value is ‘what the property will sell for on the open market’ so if a purchaser is willing to pay the purchase price – then that’s the value.  But no, once again the banks are using Valuers as Pawns too and requesting them to value as low as possible so that borrowers can borrow less.

 

This is all temporary and could turn around next month once the Government wake up to the fact that their intervention could do far more harm than good but in the meantime we can only work with the rules the banks set.

 

I have been told I should go into politics but no bloody way.  I couldn’t handle working with the peacocks.

 

I hope that makes some sense.  Probably not as it seems a crazy way to run a country.

Comments
Post has no comments.
Post a Comment




Captcha Image

Trackback Link
http://www.wfscanberra.com.au/BlogRetrieve.aspx?BlogID=6103&PostID=664928&A=Trackback
Trackbacks
Post has no trackbacks.

Discover How to Build A Property Portfolio The Right Way Right From The Start

Recent Posts


Tags


Archive