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Home repossessions start to bite

By johnboy 14 September 2006 44

The ABC is leading their national news site with a story on a sharp rise in home repossession in the ACT.

Apparently low documentation loans from mortgage brokers are the main culprit as they’ve allowed silly people to over-extend themselves.

It is, however, good news for folk looking to get into the market as a rash of forced sales should drive the market down nicely.

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44 Responses to
Home repossessions start to bite
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VYBerlinaV8 12:01 pm 18 Sep 06

“If you can’t cope with a couple of % points shift in the interest rate you shouldn’t be getting a mortgage.”

When we have borrowed for property our martgage broker recommended doing all budgeting on the basis of a 2% higher rate than what we actually received. That is apparently the number the industry considers gives home owners enough risk mitigation from interest rate rises. Makes sense, really.

vg 9:04 pm 15 Sep 06

If you can’t cope with a couple of % points shift in the interest rate you shouldn’t be getting a mortgage.

If you earn $100,000 per year you shouldn’t be mortgaging a $1,000,000 property with a 10% deposit.

Why do people walk into a mortgage with eyes open and bleat like stuck pigs when they can’t afford what should have been obvious? A fool and their money are soon parted…..or should that be a bogan and his money?

Maelinar 1:03 pm 15 Sep 06

Roland, you seem to only show up when Deb’s changing feet, something you want to tell us ?

VYBerlinaV8 12:13 pm 15 Sep 06

Low-doc and no-doc loans are a great idea and a great product. Personally I like to decide how much I can borrow and for what. I haven’t used one of these products yet, but likely will once banks decide I can’t have another investment property.

If you’re a small business owner with irregular (but solid) income, or have an unusual financial situation, they also work well.

The problem as I see it is the lack of financial education people receive. It’s hard to make informed decisions when you don’t know what you’re really getting yourself into – do we all REALLY understand all those small print clauses in our mortgage documents.

Perhaps some proper financial education for our kids is a good first step. There are plenty of resources out there developed by people who have started with nothing and done very well.

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