House prices and bank loans don't add up - Aussie Stock Forums

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  1. #1

    Default House prices and bank loans don't add up

    I can't make sense of two conflicting sets of stories:

    1. House prices are stable and rising; 72% auction clearances (yes but how many auctions??); the upgraders - 2nd or 3rd home - buyers are coming into the market.

    2. Lenders are knocking back 3 out of 4 applications; 2 months from verbal to written approval for a loan; a mortgage broker with 25 years experience (really?) missed a settlement for the first time ever because the bank didn't release the funds in time; banks will only approve loans with a fixed settlement date.

    Pent up demand I understand. Pent up price rise I understand. That an unusually high number of people might be cashed up I understand. But a surging market when large numbers of participants can't get funds????

    Does anyone know what's going on? Are settlement periods stretching out? Are sales failing to complete?

    Ghoti (the confused)
    Without music, life would be a mistake

  2. #2
    gfresh's Avatar
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    Jun 2007
    Brisbane, QLD

    Default Re: House prices and bank loans don't add up

    I don't really believe 3/4 are knocked back.. I've just been through this myself. Pre-approval done on the spot. 14 days to full approval (which was met), through CBA.. last few weeks.

    Don't believe what you read from Mortgage Brokers IMO. The banks probably couldn't care too much about them anymore with little competition outside the Big 4. I'm sure their applications are now placed at the back of the que, as there is little incentive to give them any special treatment.

    I didn't require LMI, where I assume most of the holdup is now taking place. I do hear there is a lot greater scrutiny on all LMI apps.. no rubber stamp computer system anymore. This would slow things down significantly for people that do need to obtain mortgage insurance.

    That an unusually high number of people might be cashed up I understand.
    This could be the answer, many older people shifting from equity based Super into SMSF with a property backing. Many who sold out of shares, may now putting some into property instead. Some have been unduly scared right off equities.

    This may all be setting things up for big problems down the road, yada, but right now, I think the big banks are dolling out quite a few loans, as long as you're not borderline.
    Several Species of Small Furry Animals Gathered Together in a Cave and Grooving with a Pict

  3. #3

    Default Re: House prices and bank loans don't add up

    At the height of the credit boom only 20-22% of loans were for actual purchases; taking into account the biggest drop off in lending occurred in the "cash-out" space, there is still plenty of room for purchases to be made within existing criteria.

    Having said that, LMIs haven't let their criteria out again after PMI's US troubles. We're a two-dog market for LMI so any loans that require LMI will still take ages to get through.
    Whether you think you can, or think you can't; you are right.

  4. #4

    Default Re: House prices and bank loans don't add up

    Just come across this report in today's Sydney Morning Herald which seems to show exactly what I've been hearing about

    August 3, 2009

    BEHIND the scenes, big banks are tightening up on whom they will lend money. And for the rush of customers trying to buy a house or obtain a mortgage, the result can be heartache and angst.

    The main complaint, among a number heard by the Herald, was that banks often said they would agree to a mortgage, but then delayed approving the final loan by months.

    It put home buyers at risk of losing their deposit and possibly missing out on their new home....

    The same paper also reports 88% auction clearance and terrific prices in Melbourne last weekend, so go figger. Does anyone know where to look for figures on auction sales that do not complete or for time to settlement after auction?

    Without music, life would be a mistake

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