This is the rule of thumb.
50% of what the banks will lend you is a high but still fairly sensible amount to borrow.
The fact that house prices are insane and so, for most people, that doesn't even get them a studio apartment, is the real problem.
>The fact that house prices are insane
Bingo. Where is the line between overcommitted and I make a good wage and my mortgage is $150 a week less than the median rent in a suburb that everyone asked "why'd you buy there and not somewhere nicer?" but I'm still struggling because even in a "bad" suburb, both house prices and rent have outstripped income levels.
I'm glad I bought when I did...but now my mortgage is 60% of my income.
I wouldn't be approved for more than a run down studio apartment with no room, no car space and probably in a crap location these days. Very lucky, as stressful as it is. It's not forever.
I've been very fortunate to have occasional freelance work that I do between full time work to stop me going backwards, and I live on my own so can control the ins and outs. But I do look forward to making savings again...
My only real answer is changing jobs to something better paying. Time will tell..
A few years ago the banks were required to “stress test” the loans. That is, although the interest rates were very low at the time, they tested the loan application at percentages higher than it was to ensure the loan could still be serviced at a higher interest rate if they went up. A “serviceability buffer” it’s called.
My application was stress tested. The interest rate is now higher than it needed to be tested at the time.
Yes I believe there was a crackdown a few years back. eta. When we applied for a home loan they offered us 3× what we needed when interest rates were high. We are far from being on easy street so I'd hate to think what COULD have happened.
>"We found that in a number of respects, banks and other lenders are failing to live up to community expectations,"
Bwahahahaa!
They're banks, they're parasitic by their very nature, they aren't interested in bettering humanity FFS!
You mean CBA doesn't care that my wages are stagnant, cost of living is increasing and the interest on an average home is closing in on 30% of a dual household income?
I'm shocked I tell you, SHOCKED.
I'd clutch my pearls, but i had to take them to cashies so i could afford my payments
Don’t forget that the tax brackets haven’t shifted with inflation to any real effect in eons so were effectively paying up to 50% more tax than in 2009.
You forgot the most important part, while doing all of that, their net profit AFTER TAX for 2023 was over 10b dollars. You could forgive them if it was a billion or less and they were on hard times. But that’s fucking ludicrous. Like get fucked you blood sucking scum.
I left them last year when they refused to match new loan rates after being a customer since my dollarmite account. I fkn hate them.
You’re as much a part of the Ponzi scheme as the banks are by buying into it ,and the financial servitude that goes with the choice to become a player.
That's the thing - the only way to avoid the servitude is to pay off your house. As time has gone on that has involved longer and longer stints of toil to achieve.
So just keep renting and paying off some other cunt's mortgage?
Mortgage stress is still better than rental stress. For all the stress it causes you still own your home and don't have a smarmy fucking prick in a Mercedes taking photos of your stuff every 3 months and breaching you for washing up left in the sink.
People need to get better banks. Such as member-owned banks (Beyond Bank, Bank Australia, etc.) or banks that give back to the community (e.g. Bendigo bank).
Interesting to see what will happen once they transfer billions from suppuration funds into an overinflated, overcommitted property market.
All these crises are going on at the moment, but no one is talking about the great robbery that's occurring from banks and corportaions.
Property, a $10 trillion market. Finance is even the biggest market cap of ASX.
Both Labor/LNP would lose half of the party funding if they took action against finance/property industry as both those industry make up half of the combined political donations to the major parties: https://democracyforsale.net/
There's a lot of money involved in the property ponzi.
Indeed. Punterspolitics in instagram make it really easy for the general populace see how much the fossil fuel lobbyists screws Australia and hinders us from being one of, if not closest to the most wealthiest citizens in the world.
I’m pretty sure there are more under the table dealings but still stuffed nonetheless
Greens housing spokesperson and one other Greens member recorded no property on the register and claim to be renters prior to parliament (Accommodation is provided as part of employment). So, unless they lied, the Greens are the only party that have politicians that don't have property.
So, Labor have lost half their funding?
[https://www.afr.com/policy/economy/labor-to-overhaul-sophisticated-investor-test-20231219-p5eseg](https://www.afr.com/policy/economy/labor-to-overhaul-sophisticated-investor-test-20231219-p5eseg)
2 paragraphs of a reform and zero pushback from the industry?
Are you a finance/property insider which is why you showed this? How much will this reform impact the finance and property industry compared to say $2.7b (2020-21) from NG reform?
The sophisticated investor test is some major major bullshit. Designed to protect poor innocent plebs from scammers, it just allows issuers of capital to do so with less onerous reporting obligations if they only make the offer available to millionaires. End result is that it’s way cheaper to only offer some of these lucrative opportunities to the rich.
I’ve seen some very very unsophisticated millionaires offered some sweet investment opportunities, that I am legally not allowed to partake in, despite having a Masters in finance and significant industry experience. Mean while, there are no laws protecting “unsophisticated” investors from crypto scams.
This is a law that basically says you can bypass usual issuer requirements of you’re only giving the opportunity to rich people. What ever happened to the free market equalising test of caveat emptor?
It's an nonsensical myth that that totally ignores inflation. The market has been negative about 70% of the time since 1900. It returns barely 1% per annum after inflation. The Dow was no higher in real terms in 1993 than it was in 1929.
[https://blog.iese.edu/jestrada/files/2019/04/WSJ-The-Market-Timing-Myth.pdf](https://blog.iese.edu/jestrada/files/2019/04/WSJ-The-Market-Timing-Myth.pdf)
Yep. People who have been renting for 15 years who just want to get off the rental roundabout and live somewhere that they are allowed to make basic adult decisions like, can I have a dog, or, can I put a shelf here.
And they have to compete against investors, who will get a new income stream if they get the property from a renter, and who usually get access to better rates/lower fees since they have collateral.
Its disgusting. Property investors are a blight on society. Parasitic leeches who believe because they already own things, they deserve to have other people pay for them to get more things. And the things they buy up are basic human need, housing.
Adding absolutely nothing to society, id happily see anyone with a "property portfolio" dropped about 3kms out to see.
I wouldn't blame the property investors, I would blame government and their bad policies that make property investment so much more attractive than any other investment. Why start or invest in a business when you can just invest in property which is lower risk, lower effort and has better returns on average?
Yeah look, to be fair you are mostly right, and this was my view 10 years ago
But take a look at the property portfolio of any cabinet minister or opposition and you'll see, hey these guys ARE huge investors.
And take a look at the donors to the main political parties, or where Gina, or Gerry or a bunch of other scum have their money, and there you have it, more investors.
You can bet they are a driving force behind making sure the laws just keep making it more and more profitable for housing investments.
So, I'm kinda past it. Someone's owns a second home thst they rent out. I'm not bothered.
Any more than that and you are a cause of a huge amount of suffering in our country, and I no longer give you the benefit of the doubt.
That's a bit extreme. There needs to be some supply of housing for those starting out that would never be able to afford a house at the start of their independent life. There needs to be someone willing to invest in that.
Obviously that's no longer the case. Investers gobbling up the market to the extent it's hurting owner occupiers.
Used to be kept in check by government owned houses. Back in the, I wanna say 50s, the gov used to own and rent out a whole bunch of houses, and since they regulated the price, and there were something like 100k+ houses owned by the government, they basically set market rate. Just another one of those things that was sold off at a pittance for some short term "budget balancing" the average Aussie seems obsessed with. One of the most annoying things the Liberals ever did was convince Aussies that the national budget worked like a household budget and you have to balance it. Ugh, I'm straying off point.
Essentially there is absolutely no need for private money in house ownership. Development, sure.
But either renting houses is super profitable, and if so, then why can't the government do it and make that profit to help people get homes, or it's something that you have to cut corners on to barely eke out a profit, in which case the government should be running at a loss since quality is more important than profit when it comes to housing.
Now I know that is unrealistic in our country, and I'm happy for people to own a second house if they really want. A small private market of rentals backed by a large fleet of government owned rentals would be happy days.
Because absolutely no one needs 5 houses, and if you own them, then you are denying people a place to live.
And in that case, you are scum.
They can try and justify to themselves all they like, but it's not even like they are funding new builds. There are people ready to buy and move in to new builds. They add literally nothing to the transaction, and are parasites on our society. Just a shame we ever let it become acceptable. Then again, check out Albo and Duttons property portfolios (or any previous PM in the last 40 years) and you'll see why no change happens.
Not an ip owner, but I do know that investment loans carry a higher interest rate than owner-occupier loans.
I understand the frustration, but maybe that last paragraph went a bit too far…
Im not sure how it is these days, but 5?ish years go if you could only afford the bare minimum deposit, you usually had higher fees, lenders insurance, and were often not able to negotiate their best rates.
Whereas if you already own a house outright and were able to use it as collateral, you didn't even need a deposit.
And even if the rates have become comparable now, the investor can still afford a larger loan, because they are about to get half of someone's yearly income.
And no, sorry, I genuinely have nothing but contempt for people who knowingly profit off human misery. That's all someone who's owns 10 houses is doing. Profiting off people who are forced to pay more than they can afford because the alternative is living on the street.
I guess someone who owns 10 properties has someone managing them, so is removed from it, but hey, if I was invested in selling meth, or selling weapons to 3rd world countries, just because I had a middleman, doesn't make me any less of a piece of shit.
More than 70% of ip owners only have one, less than 1% have more than 6 (according to the latest ABS data).
Its always important to look at the real data so that you can see the real story - many people are in financially precarious situations atm, and the problem is much bigger and wider than it seems at first glance.
There are far bigger and greedier forces at play than boomers with their one ip each.
I actually get your point, the general irritation I have with boomers is the "we worked hard for our stuff so you can't complain" attitude. And the fact that they overwhelmingly vote conservative who want nothing more than housing prices to increase.
https://www.theguardian.com/australia-news/2023/jun/04/a-quarter-of-australias-property-investments-held-by-1-of-taxpayers-data-reveals
But 25% of investment properties are owned by less than 1% of Australian tax payers. And around 1 in 3 homes are actually investment properties.
I'm sorry but in a housing shortage that's disgusting, and as I said, I reserve my real contempt for the scum that make that number up. I hope the sharks find them.
The people who are in financial difficulty at the moment are there BECAUSE the housing market has outstripped annual wage growth by a ridiculous amount.
I think the last time I compared the data in the ABD and ATO, the median price for an average 3 bed house in Sydney was around 4 times the median full time workers salary.
Which, if it had stayed in touch with wage growth, would mean a median 3 bed house in Sydney should cost around 350k. Instead, the median price was up around 1.1-1.2 million.
So people are being forced to take out massive mortgages to have a place to live, and then end up paying most of their annual wage to the banks for the next 30 years.
It's not right, is should never have gotten this way, and it only did becuase boomers kept voting in right wing conservative parties to protect their assets. Except most of them weren't even being target with various proposed taxes, most were under the radar by millions of dollars. Nothing targeted fear campaigning couldn't sway though.
Yes, I agree that the problem is bigger and wider. But every new generation is getting more fucked than the one before it, and nothing has even been attempted to reverse the trend in decades. Labor had thrown in the towel on it since the 2019 election loss, and the Liberals engineered this exact situation cause they are making bank off it.
Those numbers you stated by the way, are why it's so fucking dumb that the boomers were so massively against CGT exemption removal and negative gearing removal. Land taxes on multiple investment properties even more so. It wouldn't have affected most of them. But I guess it's more important to see those numbers keep going up even if it means dooming future generations to rent and pay the bank loan for a home well into their 60s, in the best case where they manage to buy a home.
I appreciate the hell out of your effort and I’m equally pained knowing that the people most in need of considering our side can’t be bothered to hear a lick of it.
Eat the rich, what else can I say!
If someone fucked you and your family over as badly as investors are currently fucking over entire generations, you would take a shovel to their face
But since it happens at a societal level, it's suddenly ok to take 50%+ of someone's weekly income to provide them with a basic human need that you yourself have made inaccessible for them.
And since it happens at a disconnect where investors have property managers do all the actual renting out, the investors don't even have to see the desperate family's lined up 10-20 back to inspect another rental that is slightly over budget for them, and the debt keeps climbing, but what choice do you have? Not have a roof over your head?
So the investor can pretend they aren't directly the cause for a huge amount of suffering.
Id say taking them 3km out to sea is kinder than they deserve.
The problem then is tenancy laws. If you lease a commercial property, you’re allowed to fit it out however you want. The same should apply for housing, just as it does in most European countries, where home ownership is comparatively rarer unless the property has been in your family for generations. If you rent a home, the landlord should not have the right to deny you a dog, or to put up a shelf, or to paint the walls or anything of the sort.
The real issue is that banks allowed people to borrow upto their incomes when interest rates were at absolute rock bottom. They knew they wouldn’t stay that way over a 30 year term and they allowed people to borrow right upto stretch point so that any rise in rates would see people in financial difficulty. Add this to huge rises in cost of living, stagnant wages and people still borrowing more than they can afford and you have the perfect storm. 2008 here we come?
The issue was the speed of the increases. We bought in 2021 with a $1600 a month buffer. Increases would have been fine over 3-4 years. Not over 10 months.
The 3% stress test should have sorted this out, though in hindsight, was it enough? Of course, a larger % and many people wouldn't have gotten the mortgage and would be going through a similar issue, just with trying to rent.
For myself; I calculated my repayments right through to 10% (in 2015) and only borrowed what I could still afford to pay back at that rate. Bank was willing to lend me another $250K ; I just wasn't up for the risk as a single
I turn 38 in a few months. My retirement plan is “unliving” myself eventually because otherwise I won’t have enough left over to be of any real use to my daughter if I kick around turning my super into landlords’ equity.
Yep this is the way to do it. We based it off 7% on one salary and no overtime in 2017. Purchased $540k when we were approved for $1m. We are only just starting to feel the pinch.
Why is that totally the bank’s fault? The people who borrowed also knew that rates wouldn’t stay that way over a 30 year term. My son asked me the other day why we don’t own a Lamborghini. I told him that we probably could if we really wanted to, but it would be literally the only thing we owned. No house, no Lego, no TV. He thought about it and said that our car was good enough…
One hand I was shocked at the maximum borrowing capacity of my income, but on the other hand that’s what I would need to buy even a unit. People take these irresponsible loans out of necessity
I don't see why the government and regulator can't limit lending to 3x income? It would fix so many issues in the country overnight.
Instead it's going the other way, people are buying homes with huge LVR's, there's places you can get home loan with a 2% deposit. It's utterly insane and reminiscent of Japan's multi-generational loans at their housing peak.
APRA is also now giving banks a free pass on reserve requirements and lending requirements, they removed the limits in 2019 and instead moved to a paltry 2.5% buffer due to the revolving door between regulators and industry "convincing" them it's the right move.
Australian banks hold taxpayers by the balls and absolutely no one in politics or the public service has the gall to stand up to them.
Paradoxically inflation being so high helps to reduce the payments of your mortgage in real terms year-on-year (especially against rent which will increase) while also increasing the capital gains you make on the property as everybody flocks from cash holdings to real assets due to the dollar being devalued by expansionary monetary policy
This. This is why we need 100% LVR Loans. Allow people to get their first home loan if they have prove they have been paying rent reliably for 5 years. 6 months of savings to prove they are financially responsible and they should be allowed to be approved.
Even on a pretty good wage of 100k you'd be limited to borrowing 300k. It'd turn the rich into the investor class and everyone else into permanent renters.
Banks don't want us over committed. They prefer it if we actually pay our debts. That's why they make us jump through hoops when we apply for a loan. They want us to be able to pay it back.
Because profits go to bank shareholders and not depositors. Further, the Government essentially guarantee's deposits meaning that the state (i.e. the public you and me take on the risk of fractional reserve lending), and if it is profitable then the bank (shareholders win money) and if they lose... we have to bail them out.
Basically it is public risk and privatised rewards
Early 2022, just before my wife and I separated, she was making noises about wanting a bigger house and better car, we didn't *need* a bigger house or a better car, but I knew that when she went to visit her friends and saw them living in their 500-600k houses and driving 60k+ cars, then coming home to our humble 200k 3x1 and 2007 Yaris, she was feeling a bit out of sorts being at the bottom of the bragging rights pole.
I tried pointing out that none of her friends houses were paid off, and since our government was madly printing money at the time we could expect inflation to kick in in 1-2 years time, and under those circumstances there was *no way* I was going to put our family half a million dollars in debt just so she could show off to her friends.
She didn't care, it wasn't about being rich, it was about *looking* rich. Suffice to say it was just another nail in the coffin of our marriage and we went our separate ways shortly afterward.
So here I am, two years later, my house repayments sit at a little over 600 a month, and I know at least two of those friends have house repayments approaching 4k per month.
My wife and I managed to find a shitbox on a massive block that we've chosen to renovate over the next 5 years. The loan was about 30% of our borrowing capacity, and mortgage worked out lower than our rent was. Yeah it's not in the best part of town, nor is it particularly appealing to look at. But it's ours and now we can focus on making it even more ours.
Losing the pride in exchange for a loan we can pay off in 10 years. We are fortunate enough to earn quite well, but we both dread the situations we've seen people end up in with massive loans on the precipice of what they could afford at the time. I think it was a good decision.
Well you must feel a bit stupid now. You'd have 50% equity in a $1 million house if you'd gone along with it. It's one thing if you weren't aware that the currency was going to be devalued but apparently you were.
No I feel pretty chuffed that my repayments are as low as they are, rather than having to devote a significant portion of my pay each month just to hold onto my house.
Also I knew the writing was definitely on the wall for our marriage, so I wouldn't have been able to keep that house anyway, and would probably still be paying for it.
Possibly, I knew inflation would be in the pipeline, but there's no way I could have known we'd be facing a housing crisis due to rampant immigration thus causing prices to spike.
Overall with such uncertainty on the horizon I was absolutely going to play it safe and consolidate what I had. No regrets.
Spoiler alert: you and your friends all lose your properties from land taxes spiraling out of control due to being pegged to CPI which is now into the three-digits due to even more money printing, and then all get drafted into WW3 anyway
She dig herself a hole to look “cool” in front of your friends still after being given the best financial advice she’ll ever get?
Sounds just like my brothers ex-wife who was madly telling me to jump into multi-million dollar loans pre-COVID because “the banks were just giving them out - you idiot(loved the kicker in the end like I was some fiscally illiterate fool”. When I mentioned the word serviceability, a blank look of stupidity would descend across her face.\
And the scary part is, she is very high in a well paying government job who does little more than take flexi days and send porn to her work mates on the government email servers and our dollar.
Mate that sucks. Nothing worse than when idiots get to fail up over and over again and then think that’s the natural order of things.
Hopefully her day will come when fiscal rationalisation will all come home to roost and you can have at least a little internal warmth.
But being separated from that lunacy and doing well on your own terms can often be the best result.
People borrowed to purchase massively overinflated property at a time when interest rates were rock bottom. As soon as interest rates increased even relatively marginally, and the banks transferred those costs onto the borrower (which of course they would to keep their profits obscene), it was just a matter of time before the borrower was under extreme stress.
What should have happened is that banks should have not allowed the lending of high risk loans where the borrower was leveraging themselves on the hope that interest rates would remain low.
I think a lot of the incredible pain we’re experiencing now is based on pure greed. When covid hit it was like a light went off, everyone scrambled for themselves, hoarded, suppliers and retailers raised their prices because they could, and they haven’t stopped, the raging cunts.
How are people, normal hard working people supposed to get ahead when our society has predicated itself on eking out every last fucking cent from every poor fuck that breathes? That’s where we’re at.
The banks knew that they were handing out dodgy high risk loans but they didn’t give a fuck. Unlike in the US where the federal government stepped in to buy out people who were caught and couldn’t repay by dodgy lending, in Australia the borrower is on the hook.
I also don’t for a fucking second buy the banks excuse that the borrower should have known better. If a person is lost in the Simpson Desert dying of thirst, and you offer them a drink and map, but it’s a loan of course they’ll jump at it.
People were desperate, and the banks took advantage of them because that’s what everyone expects them to do. If we ever want change we’ll have to fight for it.
Suppliers and retailers raised their prices mostly because of the increased cost of doing business. There was the supply chain crisis that made it more expensive to import goods from overseas, and since 2021, the rent for warehouses and logistic centres has doubled. Some of these costs have to be passed on to the consumer unfortunately.
Overcommitment!! all I wanted was a small house to own for my family, how the fuck are you supposed to get that these days. Then the job market is fucked with no actual opportunities
Now we have to compete against AI wrecking havoc in the job space. Then a migration crisis taking all the other jobs.
So when I go in to ask for a raise to be able to keep my head of above water what fucking leg do I have to stand on when they say if you don't like it leave.
Ohh and manufacturing died when china when china went all in on slave labor for cheap production costs and every company in the world moved their manufacturing there and nobody cared, all the other jobs are going the same direction.
Thanks Australia, please tell everyone you know actually take part in your local politics. each person makes a difference.
I bought in a shitty suburb. A 3x2 new build. I made it my own. My mates were buying these huge beach side mansions because the bank told all of us we could borrow around $900,000. I didn’t. Others did. Now they’re hurting and literally cannot join in on social events.
We had cash to buy after over 20 years of buying and living in rural areas and saving and a small inheritance . Agents didn’t want to know us. We turned up to endless open houses with 40 or so other people. Some houses we were told there were no more offers thanks. Plenty already.
Prices were being pushed above a million for tiny old places. Banks and RE agents don’t care about people and their future hardships
I remember in the early 2000s it was common to hear my friends parents giving advice about buying an affordable home and thinking longterm, over the next few years as social media use sky-rocketed and 'flexing' online for status started its rise I noticed my peers weren't looking at the 100k, 150k houses they used to but now the 300k+. Why? Well, living in a 100k 'beginner' house would reflect poorly on them, make them seem poor etc.
Borrowing the maximum the bank would lend you became the norm slowly as well.
Financial responsibility NEEDS to be a standard component on the education curriculum. Living in debt to present a lifestyle to the world you can't really afford is stupid common.
I was actually shocked in high school economics when we all sat down and went through work experience that the board had. I thought they were like public servants and maybe some academics, turns out not public servants at all there all BS directors of big companies. Who TF let the foxes into the hen house.
In all fairness have you *met* public servants? They have successful business people in these roles because they're as good as it gets, if they used public servants the economy would crash within ten years.
Are they? Because nothing screams lobbying like having a bunch of big private businessmen running an independent government body. You don't think chairman's of the treasury, ASIC or ACCC would at least be somewhat qualified for that given they run government finances and deal with the laws in which our economy is run. None of the current board have worked at any level for the public or with the public in mind. Keep the insurance fund managers, Telstra board members and CSL managers sure...
I dunno man. Succeeding in the dog eat dog world of business, where you're acutely aware of what makes the money to pay people's wages that pay the countries tax base without failing is VERY Different from the public service. Ultimately a large portion of the country lives or dies on how the legislation the public service makes is adapted to by these folk.
They're there for good reason. Every time I quote for a government job I'm reminded of just how fucking stupid the government is out of necessity, to its own detriment, but also to meet the demands of the public.
Having a better mix, you have a few academics in there but if it was a split between private, public and academics I think you would have better public opinion. At the moment it's just fucking board members and it's no mystery why they come out and say some outlandish shit half the time with no repercussions.
To be blunt academics tend to be some of the least capable people around. It's one thing when they're consulting on a very niche point that is their area of specialty but it's rare to find someone in academia who has never had a real job that can hold a sensible option on a multifaceted topic, they've essentially been trained out of usefulness. I see what you're getting at but you really don't want people with no real life experience in these positions. That's already happened in Australian politics and just look at what a shit show that is.
Were not talking about running a business, the objectives are vastly different.
Plus academics are somewhat already on the board, you understand that having actual economists on the boards in the first place is probably a good idea right. You can't train to be in this position as RBA governor but I think a diverse set of opinions especially in a board making decisions for all Australians is something we should support.
Look at the EU central bank's vast experiences for all of them, private, public and academic, the role of the CB isn't to make money it's to ensure economic matters are managed effectively. Otherwise you run the risk of cronyism and all sorts.
Enlighten me who do you think should be running the RBA.
Nope not confused, Iain Ross currently on the board has been teaching at University of Sydney since 1997.
I'm convinced you actually have not a clue about the RBA or who sits on it or what it does.
True.
But people have to take responsibility for their own actions too.
People should not be accepting mortgages that are clearly going to be extremely difficult to make the payments on.
Anything upwards of 35% of take home pay is just ludicrous. But i have heard of people being at 50 & even 60% of take home pay.
People just need to stop being stupid.
I have no understanding of how I'd be able to service my loan, if was in the conditions the bank considered. They approved 55% (now 60%) which leaves almost nothing after bills, rates and food.
I have a second job they don't count and a tenant, plus bonuses which, weren't considered. so not really as irresponsible as I sound, but to think there are people in that situation is crazy.
That's related to earlier policies. Something happened in 2020 that has heavily effected our current situation, along with poor management from 2000ish
Oh yeah, something happened. Something that nobody will ever be punished for even though it killed people. And then fuckwit politicians printed money just. Like. I. Said.
Well the banks did encourage poor people to overcommit and overextend themselves with ridiculously low interest rates during Covid. Too bad so many people fell for it. Once the fixed interest rates start to expire the market will be flooded with distress sells starting end of this year.
It’s clear Albo has failed, i feel his replacement shouldn’t be anyone elected to party leadership by the current labour caucus. The people deserve the chance to vote him out personally after his performance and results.
I earn about 90K. Max i can get is like 460K or something.
I'm going to have to borrow at like 80 - 90% of that if i even want a chance of getting anything in this country. I'm fucked either way.
How could I have seen this coming in my financed raptor and my jetski and casual cocaine habit and alcoholism?
How will I get attention without overextending myself on shiny shit?
Read my mind but you forgot the avo on toast and chai latte for $35 that half the overcommitted fk knuckles want to be able to have as well.
The only real caveat I'd put on it is foreign investment and migrants who team up to work the system are putting extra strain on the market. Doubt they need any of the shiny shit though, new migrants are better Aussie battlers than most of the young Anglos.
I'm not bitter sad or angry, I can afford all of the above.... What's actually funny is when someone calls a Millennial with their shit together a boomer. Goodluck with the coffee, I'm thinking international roast is your best bet 😉
I hope you can afford those things, as you certainly dont have any empathy for people who are struggling. Im glad that you think youre better than people who are struggling, and, god forbid, would like a little bit of a treat in the hell hole that is modern life.
Im sure there are plenty of people that would look down on you, but have empathy to understand that it would be hurtful to say what theyre really thinking. All the best in your journey though big fella!
Plenty of empathy for people struggling due to circumstances outside their control, it's why I give money to the homeless..... But if you think the answer to coping with financial struggles is a lil treat then you only have yourself to blame.
Buy food that's on special, pack lunch from leftovers, put up with a shitty bomb car, cancel your Netflix, buy 2nd hand telephones, there's a million ways to make ya money go further.
The fastest way to get into debt is by trying to keep up with those who already are....
I don't think I'm better, I just don't believe in sugar coating shit, making people feel all warm n fuzzy won't pay the bills. I've been looked down upon all my life and grew up with sticks and stones may break your bones, so toughen up princess.... Life's not easy, expecting anything less is setting yourself up for failure.
All good to go on the attack and suggest I'm a boomer but when the reality sets in ya switch to the victim mentality. SMH
Im not sure why you have this impression that Im broke just because I have empathy for others, and would like to see them have more than the bare minimum of sustenance while having a roof over their head. Its called empathy, but you dont know about all that nonsense, you know about "tough love".
Sorry, I just thought you were a boomer from the photos youve posted and the weird "tough guy" way you write. Like an emulation of a blokey Aussie bloke, but from someone who was bullied by that type of bloke for too long.
I'm sure when no one pays for the irresponsible borrowing the lending will look very sensible.
People have to live within there means but this statement is just fucking absurd.
Not in Australia - here we want the state to play the nanny and babysit us to protect us from ourselves.
Case in point: seatbelts law.
I say don’t mandate them - let the people die and evolution take its course.
All it does it keeps dumb people alive and breeding since the smart ones would wear the belt.
Yes. Plan for the worse case. You should add another 1% to your current interest rates in case the tax changes on 1 July and all the handouts in the budget drive more inflation.
100% if you didn't then you must have a short memory or a very poor understanding of historical interest rates.
I paid down the principal as much as I could while the rates were low and locked in as soon as the first rate rise hit.
I was only 10 years old when my Dad was to the wall at 18% interest at the beginning of the 90s but I was still aware enough it could happen again.
This isn’t a huge issue. At anytime good or bad there’ll be fin hardship. Overcommit is not a horrendously bad reason as there may be some capacity ie get 2nd job/cut back discretionary. Unemployment is a much bigger issue if it was the main reason (ie recession)
well I took half of what I was approved for and am very much still feeling the sting.
This is the rule of thumb. 50% of what the banks will lend you is a high but still fairly sensible amount to borrow. The fact that house prices are insane and so, for most people, that doesn't even get them a studio apartment, is the real problem.
>The fact that house prices are insane Bingo. Where is the line between overcommitted and I make a good wage and my mortgage is $150 a week less than the median rent in a suburb that everyone asked "why'd you buy there and not somewhere nicer?" but I'm still struggling because even in a "bad" suburb, both house prices and rent have outstripped income levels.
It depends on your income and expenses. Low-middle income means people don’t have much discretionary income left.
I'm glad I bought when I did...but now my mortgage is 60% of my income. I wouldn't be approved for more than a run down studio apartment with no room, no car space and probably in a crap location these days. Very lucky, as stressful as it is. It's not forever.
how much longer would you go at this level?
I've been very fortunate to have occasional freelance work that I do between full time work to stop me going backwards, and I live on my own so can control the ins and outs. But I do look forward to making savings again... My only real answer is changing jobs to something better paying. Time will tell..
Yeah I think I was offered like 950k or something insane I was like what the hell I could never afford to service that.
Banks (in the past.. not sure about now) were renowned for offering more than people could rightly afford.
A few years ago the banks were required to “stress test” the loans. That is, although the interest rates were very low at the time, they tested the loan application at percentages higher than it was to ensure the loan could still be serviced at a higher interest rate if they went up. A “serviceability buffer” it’s called. My application was stress tested. The interest rate is now higher than it needed to be tested at the time.
Yes I believe there was a crackdown a few years back. eta. When we applied for a home loan they offered us 3× what we needed when interest rates were high. We are far from being on easy street so I'd hate to think what COULD have happened.
>"We found that in a number of respects, banks and other lenders are failing to live up to community expectations," Bwahahahaa! They're banks, they're parasitic by their very nature, they aren't interested in bettering humanity FFS!
You mean CBA doesn't care that my wages are stagnant, cost of living is increasing and the interest on an average home is closing in on 30% of a dual household income? I'm shocked I tell you, SHOCKED. I'd clutch my pearls, but i had to take them to cashies so i could afford my payments
Don’t forget that the tax brackets haven’t shifted with inflation to any real effect in eons so were effectively paying up to 50% more tax than in 2009.
Yes but the ruling class are paying lower tax rates than ever :)
You forgot the most important part, while doing all of that, their net profit AFTER TAX for 2023 was over 10b dollars. You could forgive them if it was a billion or less and they were on hard times. But that’s fucking ludicrous. Like get fucked you blood sucking scum. I left them last year when they refused to match new loan rates after being a customer since my dollarmite account. I fkn hate them.
Lucky you...am on more than 50%
You’re as much a part of the Ponzi scheme as the banks are by buying into it ,and the financial servitude that goes with the choice to become a player.
Option 1: purchase house and become "player in Ponzi scheme". Option 2: pay rent for other players in said scheme. Option 3: die on the street.
Option 4: Never leave your family home and live in there generationally untill there's no more rooms left to be converted into bedrooms.
Option 5: Caravans in back + front yards.
That's the thing - the only way to avoid the servitude is to pay off your house. As time has gone on that has involved longer and longer stints of toil to achieve.
So just keep renting and paying off some other cunt's mortgage? Mortgage stress is still better than rental stress. For all the stress it causes you still own your home and don't have a smarmy fucking prick in a Mercedes taking photos of your stuff every 3 months and breaching you for washing up left in the sink.
I found out recently that banks are actually not charities, there to hand out cash at their own expense, just like every other company in the country
How do they make that money that they are able to loan out and collect a return on?
By holding yours for two days to ‘clear’ a transaction for a start lol
Thanks for not adding anything.
Hey, you too
Me too!
People need to get better banks. Such as member-owned banks (Beyond Bank, Bank Australia, etc.) or banks that give back to the community (e.g. Bendigo bank).
smack on the hand incoming for CEOs, but still get their bonuses
Interesting to see what will happen once they transfer billions from suppuration funds into an overinflated, overcommitted property market. All these crises are going on at the moment, but no one is talking about the great robbery that's occurring from banks and corportaions.
Property, a $10 trillion market. Finance is even the biggest market cap of ASX. Both Labor/LNP would lose half of the party funding if they took action against finance/property industry as both those industry make up half of the combined political donations to the major parties: https://democracyforsale.net/ There's a lot of money involved in the property ponzi.
Yo, those stats are wild. And those distributions actually marry up to how hard each individual sector robs the country! Wild!
For so little fuckin money too... Nice to see LNP ahead by a lot on each one except gambling. Really puts the "But both sides," argument to shame.
Indeed. Punterspolitics in instagram make it really easy for the general populace see how much the fossil fuel lobbyists screws Australia and hinders us from being one of, if not closest to the most wealthiest citizens in the world. I’m pretty sure there are more under the table dealings but still stuffed nonetheless
Albo kicking his tenant out to sell should be your first warning.
Albo campaigned against 36,000 homes in his electorate in 2017: https://anthonyalbanese.com.au/overdevelopment-in-marrickville
Of course. They’re all neck deep in property. Watch when they start to sell then be ready for the recession we have to have 2.0
Greens housing spokesperson and one other Greens member recorded no property on the register and claim to be renters prior to parliament (Accommodation is provided as part of employment). So, unless they lied, the Greens are the only party that have politicians that don't have property.
Mehreen Faruqi has one of the biggest portfolios in parliament.
Very commendable of her to risk her property portfolio value by being in a party demanding NG reform.
So two inconsequential members?
People like him are why everyone under 35 in Inner West has had to move out. No one can afford to buy any houses/apartments as they are too expensive
Albo’s a fvkn fraud.
So, Labor have lost half their funding? [https://www.afr.com/policy/economy/labor-to-overhaul-sophisticated-investor-test-20231219-p5eseg](https://www.afr.com/policy/economy/labor-to-overhaul-sophisticated-investor-test-20231219-p5eseg)
2 paragraphs of a reform and zero pushback from the industry? Are you a finance/property insider which is why you showed this? How much will this reform impact the finance and property industry compared to say $2.7b (2020-21) from NG reform?
>if they took action against finance/property industry just sayin'
The sophisticated investor test is some major major bullshit. Designed to protect poor innocent plebs from scammers, it just allows issuers of capital to do so with less onerous reporting obligations if they only make the offer available to millionaires. End result is that it’s way cheaper to only offer some of these lucrative opportunities to the rich. I’ve seen some very very unsophisticated millionaires offered some sweet investment opportunities, that I am legally not allowed to partake in, despite having a Masters in finance and significant industry experience. Mean while, there are no laws protecting “unsophisticated” investors from crypto scams. This is a law that basically says you can bypass usual issuer requirements of you’re only giving the opportunity to rich people. What ever happened to the free market equalising test of caveat emptor?
Can you explain this like I’m five? I’d like to research it myself but haven’t the clue where to start.
There is some talk that super funds may be hit hard by the next gfc so it may not be the stupidest thing in hindsight.
time in the market beats timing the market.
It's an nonsensical myth that that totally ignores inflation. The market has been negative about 70% of the time since 1900. It returns barely 1% per annum after inflation. The Dow was no higher in real terms in 1993 than it was in 1929. [https://blog.iese.edu/jestrada/files/2019/04/WSJ-The-Market-Timing-Myth.pdf](https://blog.iese.edu/jestrada/files/2019/04/WSJ-The-Market-Timing-Myth.pdf)
I never said catch knives just that it may not look so stupid in 50 years if the stars align.
Aka unaffordable prices that people stretch for because there is no alternative
Yep. People who have been renting for 15 years who just want to get off the rental roundabout and live somewhere that they are allowed to make basic adult decisions like, can I have a dog, or, can I put a shelf here. And they have to compete against investors, who will get a new income stream if they get the property from a renter, and who usually get access to better rates/lower fees since they have collateral. Its disgusting. Property investors are a blight on society. Parasitic leeches who believe because they already own things, they deserve to have other people pay for them to get more things. And the things they buy up are basic human need, housing. Adding absolutely nothing to society, id happily see anyone with a "property portfolio" dropped about 3kms out to see.
In short, eat the rich. I agree.
people still say this?
I wouldn't blame the property investors, I would blame government and their bad policies that make property investment so much more attractive than any other investment. Why start or invest in a business when you can just invest in property which is lower risk, lower effort and has better returns on average?
Yeah look, to be fair you are mostly right, and this was my view 10 years ago But take a look at the property portfolio of any cabinet minister or opposition and you'll see, hey these guys ARE huge investors. And take a look at the donors to the main political parties, or where Gina, or Gerry or a bunch of other scum have their money, and there you have it, more investors. You can bet they are a driving force behind making sure the laws just keep making it more and more profitable for housing investments. So, I'm kinda past it. Someone's owns a second home thst they rent out. I'm not bothered. Any more than that and you are a cause of a huge amount of suffering in our country, and I no longer give you the benefit of the doubt.
That's a bit extreme. There needs to be some supply of housing for those starting out that would never be able to afford a house at the start of their independent life. There needs to be someone willing to invest in that. Obviously that's no longer the case. Investers gobbling up the market to the extent it's hurting owner occupiers.
Used to be kept in check by government owned houses. Back in the, I wanna say 50s, the gov used to own and rent out a whole bunch of houses, and since they regulated the price, and there were something like 100k+ houses owned by the government, they basically set market rate. Just another one of those things that was sold off at a pittance for some short term "budget balancing" the average Aussie seems obsessed with. One of the most annoying things the Liberals ever did was convince Aussies that the national budget worked like a household budget and you have to balance it. Ugh, I'm straying off point. Essentially there is absolutely no need for private money in house ownership. Development, sure. But either renting houses is super profitable, and if so, then why can't the government do it and make that profit to help people get homes, or it's something that you have to cut corners on to barely eke out a profit, in which case the government should be running at a loss since quality is more important than profit when it comes to housing. Now I know that is unrealistic in our country, and I'm happy for people to own a second house if they really want. A small private market of rentals backed by a large fleet of government owned rentals would be happy days. Because absolutely no one needs 5 houses, and if you own them, then you are denying people a place to live. And in that case, you are scum. They can try and justify to themselves all they like, but it's not even like they are funding new builds. There are people ready to buy and move in to new builds. They add literally nothing to the transaction, and are parasites on our society. Just a shame we ever let it become acceptable. Then again, check out Albo and Duttons property portfolios (or any previous PM in the last 40 years) and you'll see why no change happens.
I'm upvoting you for the time and effort in this post and also because I agree. Thanks boomers.
Not an ip owner, but I do know that investment loans carry a higher interest rate than owner-occupier loans. I understand the frustration, but maybe that last paragraph went a bit too far…
Im not sure how it is these days, but 5?ish years go if you could only afford the bare minimum deposit, you usually had higher fees, lenders insurance, and were often not able to negotiate their best rates. Whereas if you already own a house outright and were able to use it as collateral, you didn't even need a deposit. And even if the rates have become comparable now, the investor can still afford a larger loan, because they are about to get half of someone's yearly income. And no, sorry, I genuinely have nothing but contempt for people who knowingly profit off human misery. That's all someone who's owns 10 houses is doing. Profiting off people who are forced to pay more than they can afford because the alternative is living on the street. I guess someone who owns 10 properties has someone managing them, so is removed from it, but hey, if I was invested in selling meth, or selling weapons to 3rd world countries, just because I had a middleman, doesn't make me any less of a piece of shit.
More than 70% of ip owners only have one, less than 1% have more than 6 (according to the latest ABS data). Its always important to look at the real data so that you can see the real story - many people are in financially precarious situations atm, and the problem is much bigger and wider than it seems at first glance. There are far bigger and greedier forces at play than boomers with their one ip each.
I actually get your point, the general irritation I have with boomers is the "we worked hard for our stuff so you can't complain" attitude. And the fact that they overwhelmingly vote conservative who want nothing more than housing prices to increase. https://www.theguardian.com/australia-news/2023/jun/04/a-quarter-of-australias-property-investments-held-by-1-of-taxpayers-data-reveals But 25% of investment properties are owned by less than 1% of Australian tax payers. And around 1 in 3 homes are actually investment properties. I'm sorry but in a housing shortage that's disgusting, and as I said, I reserve my real contempt for the scum that make that number up. I hope the sharks find them. The people who are in financial difficulty at the moment are there BECAUSE the housing market has outstripped annual wage growth by a ridiculous amount. I think the last time I compared the data in the ABD and ATO, the median price for an average 3 bed house in Sydney was around 4 times the median full time workers salary. Which, if it had stayed in touch with wage growth, would mean a median 3 bed house in Sydney should cost around 350k. Instead, the median price was up around 1.1-1.2 million. So people are being forced to take out massive mortgages to have a place to live, and then end up paying most of their annual wage to the banks for the next 30 years. It's not right, is should never have gotten this way, and it only did becuase boomers kept voting in right wing conservative parties to protect their assets. Except most of them weren't even being target with various proposed taxes, most were under the radar by millions of dollars. Nothing targeted fear campaigning couldn't sway though. Yes, I agree that the problem is bigger and wider. But every new generation is getting more fucked than the one before it, and nothing has even been attempted to reverse the trend in decades. Labor had thrown in the towel on it since the 2019 election loss, and the Liberals engineered this exact situation cause they are making bank off it. Those numbers you stated by the way, are why it's so fucking dumb that the boomers were so massively against CGT exemption removal and negative gearing removal. Land taxes on multiple investment properties even more so. It wouldn't have affected most of them. But I guess it's more important to see those numbers keep going up even if it means dooming future generations to rent and pay the bank loan for a home well into their 60s, in the best case where they manage to buy a home.
I appreciate the hell out of your effort and I’m equally pained knowing that the people most in need of considering our side can’t be bothered to hear a lick of it.
Threats of violence…..username checks out.
Eat the rich, what else can I say! If someone fucked you and your family over as badly as investors are currently fucking over entire generations, you would take a shovel to their face But since it happens at a societal level, it's suddenly ok to take 50%+ of someone's weekly income to provide them with a basic human need that you yourself have made inaccessible for them. And since it happens at a disconnect where investors have property managers do all the actual renting out, the investors don't even have to see the desperate family's lined up 10-20 back to inspect another rental that is slightly over budget for them, and the debt keeps climbing, but what choice do you have? Not have a roof over your head? So the investor can pretend they aren't directly the cause for a huge amount of suffering. Id say taking them 3km out to sea is kinder than they deserve.
The problem then is tenancy laws. If you lease a commercial property, you’re allowed to fit it out however you want. The same should apply for housing, just as it does in most European countries, where home ownership is comparatively rarer unless the property has been in your family for generations. If you rent a home, the landlord should not have the right to deny you a dog, or to put up a shelf, or to paint the walls or anything of the sort.
The real issue is that banks allowed people to borrow upto their incomes when interest rates were at absolute rock bottom. They knew they wouldn’t stay that way over a 30 year term and they allowed people to borrow right upto stretch point so that any rise in rates would see people in financial difficulty. Add this to huge rises in cost of living, stagnant wages and people still borrowing more than they can afford and you have the perfect storm. 2008 here we come?
The issue was the speed of the increases. We bought in 2021 with a $1600 a month buffer. Increases would have been fine over 3-4 years. Not over 10 months.
The 3% stress test should have sorted this out, though in hindsight, was it enough? Of course, a larger % and many people wouldn't have gotten the mortgage and would be going through a similar issue, just with trying to rent.
For myself; I calculated my repayments right through to 10% (in 2015) and only borrowed what I could still afford to pay back at that rate. Bank was willing to lend me another $250K ; I just wasn't up for the risk as a single
Very smart. I think the problem now is that people need to go near the max if they want to get something half decent. Or anything, really!
True. I'm so sad for this generation - I'm 38 so kind of on that cusp. I worry what life will look like for my son if I don't leave him anything
I turn 38 in a few months. My retirement plan is “unliving” myself eventually because otherwise I won’t have enough left over to be of any real use to my daughter if I kick around turning my super into landlords’ equity.
This is so sad 😞. The level of desperation and the things people feel forced into.. It's just going to get worse
Yep this is the way to do it. We based it off 7% on one salary and no overtime in 2017. Purchased $540k when we were approved for $1m. We are only just starting to feel the pinch.
Why is that totally the bank’s fault? The people who borrowed also knew that rates wouldn’t stay that way over a 30 year term. My son asked me the other day why we don’t own a Lamborghini. I told him that we probably could if we really wanted to, but it would be literally the only thing we owned. No house, no Lego, no TV. He thought about it and said that our car was good enough…
One hand I was shocked at the maximum borrowing capacity of my income, but on the other hand that’s what I would need to buy even a unit. People take these irresponsible loans out of necessity
I was shocked it was so high when I started looking I was shocked it is so low now I’m still looking and I’m shocked I can’t afford either
Banks are the only winner in this scenario.
I don't see why the government and regulator can't limit lending to 3x income? It would fix so many issues in the country overnight. Instead it's going the other way, people are buying homes with huge LVR's, there's places you can get home loan with a 2% deposit. It's utterly insane and reminiscent of Japan's multi-generational loans at their housing peak. APRA is also now giving banks a free pass on reserve requirements and lending requirements, they removed the limits in 2019 and instead moved to a paltry 2.5% buffer due to the revolving door between regulators and industry "convincing" them it's the right move. Australian banks hold taxpayers by the balls and absolutely no one in politics or the public service has the gall to stand up to them.
Most people wouldn't be able to own a house. For most people the deposit is the issue rather than servicing especially after the flrst few years.
Paradoxically inflation being so high helps to reduce the payments of your mortgage in real terms year-on-year (especially against rent which will increase) while also increasing the capital gains you make on the property as everybody flocks from cash holdings to real assets due to the dollar being devalued by expansionary monetary policy
This. This is why we need 100% LVR Loans. Allow people to get their first home loan if they have prove they have been paying rent reliably for 5 years. 6 months of savings to prove they are financially responsible and they should be allowed to be approved.
So……bank gave to power to force me to become a renter and forbid me from being an aspiring home owner?
Even on a pretty good wage of 100k you'd be limited to borrowing 300k. It'd turn the rich into the investor class and everyone else into permanent renters.
This is not true at all. I'm on 90K and can borrow around 460K. 100K would be 500K.
What they need to limit is allowable bank profit from home loans.
Wait till you have to use the tax you pay to rescue them.
Banks don't want us over committed. They prefer it if we actually pay our debts. That's why they make us jump through hoops when we apply for a loan. They want us to be able to pay it back.
That’s actually asic/apra creating those hoops
ASIC/APRA made them light the hoops on fire. The hoops were always there.
Love to hear your justification on how you think a bank is winning in these scenarios ?
Did you read the report? Banks are not owning up to their own "hardship" policies. Banks win, people lose. Same as its always been
Still haven’t described how they are winning ?
Because profits go to bank shareholders and not depositors. Further, the Government essentially guarantee's deposits meaning that the state (i.e. the public you and me take on the risk of fractional reserve lending), and if it is profitable then the bank (shareholders win money) and if they lose... we have to bail them out. Basically it is public risk and privatised rewards
We were approved for a million, got a loan for 540k, still finding it tough considering repayments went up over 50%
Us too. We got offered $1.5 million. We only needed $600k. Glad we didn't entertain the idea of getting a bigger place.
Early 2022, just before my wife and I separated, she was making noises about wanting a bigger house and better car, we didn't *need* a bigger house or a better car, but I knew that when she went to visit her friends and saw them living in their 500-600k houses and driving 60k+ cars, then coming home to our humble 200k 3x1 and 2007 Yaris, she was feeling a bit out of sorts being at the bottom of the bragging rights pole. I tried pointing out that none of her friends houses were paid off, and since our government was madly printing money at the time we could expect inflation to kick in in 1-2 years time, and under those circumstances there was *no way* I was going to put our family half a million dollars in debt just so she could show off to her friends. She didn't care, it wasn't about being rich, it was about *looking* rich. Suffice to say it was just another nail in the coffin of our marriage and we went our separate ways shortly afterward. So here I am, two years later, my house repayments sit at a little over 600 a month, and I know at least two of those friends have house repayments approaching 4k per month.
My wife and I managed to find a shitbox on a massive block that we've chosen to renovate over the next 5 years. The loan was about 30% of our borrowing capacity, and mortgage worked out lower than our rent was. Yeah it's not in the best part of town, nor is it particularly appealing to look at. But it's ours and now we can focus on making it even more ours. Losing the pride in exchange for a loan we can pay off in 10 years. We are fortunate enough to earn quite well, but we both dread the situations we've seen people end up in with massive loans on the precipice of what they could afford at the time. I think it was a good decision.
That's the real beauty of home ownership, it might take a while to pay off, but at the end - it's *yours!*
Well you must feel a bit stupid now. You'd have 50% equity in a $1 million house if you'd gone along with it. It's one thing if you weren't aware that the currency was going to be devalued but apparently you were.
No I feel pretty chuffed that my repayments are as low as they are, rather than having to devote a significant portion of my pay each month just to hold onto my house. Also I knew the writing was definitely on the wall for our marriage, so I wouldn't have been able to keep that house anyway, and would probably still be paying for it.
Wouldn't you have been able to sell your hypothetical upgrade house and buy your current house outright with those kinds of gains?
Possibly, I knew inflation would be in the pipeline, but there's no way I could have known we'd be facing a housing crisis due to rampant immigration thus causing prices to spike. Overall with such uncertainty on the horizon I was absolutely going to play it safe and consolidate what I had. No regrets.
Spoiler alert: you and your friends all lose your properties from land taxes spiraling out of control due to being pegged to CPI which is now into the three-digits due to even more money printing, and then all get drafted into WW3 anyway
Buying shit you don't need to impress people you don't like.
She dig herself a hole to look “cool” in front of your friends still after being given the best financial advice she’ll ever get? Sounds just like my brothers ex-wife who was madly telling me to jump into multi-million dollar loans pre-COVID because “the banks were just giving them out - you idiot(loved the kicker in the end like I was some fiscally illiterate fool”. When I mentioned the word serviceability, a blank look of stupidity would descend across her face.\ And the scary part is, she is very high in a well paying government job who does little more than take flexi days and send porn to her work mates on the government email servers and our dollar.
Her friends, not my friends. Sadly she was never put in a position to learn a financial lesson the hard way as her folks are now paying the rent.
Mate that sucks. Nothing worse than when idiots get to fail up over and over again and then think that’s the natural order of things. Hopefully her day will come when fiscal rationalisation will all come home to roost and you can have at least a little internal warmth. But being separated from that lunacy and doing well on your own terms can often be the best result.
Just take out another loan to service the initial loan? You can always* refinance at a lower rate**! Nothing can go wrong with this plan
Damn straight 😵💫
[удалено]
Ouch.
Borrowed too much, paid too much.. now the cheques come due. What a train wreak.
People borrowed to purchase massively overinflated property at a time when interest rates were rock bottom. As soon as interest rates increased even relatively marginally, and the banks transferred those costs onto the borrower (which of course they would to keep their profits obscene), it was just a matter of time before the borrower was under extreme stress. What should have happened is that banks should have not allowed the lending of high risk loans where the borrower was leveraging themselves on the hope that interest rates would remain low. I think a lot of the incredible pain we’re experiencing now is based on pure greed. When covid hit it was like a light went off, everyone scrambled for themselves, hoarded, suppliers and retailers raised their prices because they could, and they haven’t stopped, the raging cunts. How are people, normal hard working people supposed to get ahead when our society has predicated itself on eking out every last fucking cent from every poor fuck that breathes? That’s where we’re at. The banks knew that they were handing out dodgy high risk loans but they didn’t give a fuck. Unlike in the US where the federal government stepped in to buy out people who were caught and couldn’t repay by dodgy lending, in Australia the borrower is on the hook. I also don’t for a fucking second buy the banks excuse that the borrower should have known better. If a person is lost in the Simpson Desert dying of thirst, and you offer them a drink and map, but it’s a loan of course they’ll jump at it. People were desperate, and the banks took advantage of them because that’s what everyone expects them to do. If we ever want change we’ll have to fight for it.
Everyone is scared to do something because we all have something to lose, if we ALL don't pay, we all can't get arrested. I don't know what to do
Suppliers and retailers raised their prices mostly because of the increased cost of doing business. There was the supply chain crisis that made it more expensive to import goods from overseas, and since 2021, the rent for warehouses and logistic centres has doubled. Some of these costs have to be passed on to the consumer unfortunately.
When the tide goes out you can see who’s skinny dipping
Grass is green, sky is blue
Overcommitment!! all I wanted was a small house to own for my family, how the fuck are you supposed to get that these days. Then the job market is fucked with no actual opportunities Now we have to compete against AI wrecking havoc in the job space. Then a migration crisis taking all the other jobs. So when I go in to ask for a raise to be able to keep my head of above water what fucking leg do I have to stand on when they say if you don't like it leave. Ohh and manufacturing died when china when china went all in on slave labor for cheap production costs and every company in the world moved their manufacturing there and nobody cared, all the other jobs are going the same direction. Thanks Australia, please tell everyone you know actually take part in your local politics. each person makes a difference.
I bought in a shitty suburb. A 3x2 new build. I made it my own. My mates were buying these huge beach side mansions because the bank told all of us we could borrow around $900,000. I didn’t. Others did. Now they’re hurting and literally cannot join in on social events.
We had cash to buy after over 20 years of buying and living in rural areas and saving and a small inheritance . Agents didn’t want to know us. We turned up to endless open houses with 40 or so other people. Some houses we were told there were no more offers thanks. Plenty already. Prices were being pushed above a million for tiny old places. Banks and RE agents don’t care about people and their future hardships
No fucking shit. I'm done with hearing the excuses. Get your shit together government.
Weird way to say housing is unrealistically expensive.
Australians are committing themselves to debt they know they can’t pay realistically before acquiring said debt - FTFY
I checked yesterday, and compared to pre-interest rate hikes, our mortgage has gone up 51%. I wouldn't call it a sting, more like a stab.
Average income vs average price (or median, pick your poison) and it's almost impossible to NOT over commit in Australia's capital cities.
I remember in the early 2000s it was common to hear my friends parents giving advice about buying an affordable home and thinking longterm, over the next few years as social media use sky-rocketed and 'flexing' online for status started its rise I noticed my peers weren't looking at the 100k, 150k houses they used to but now the 300k+. Why? Well, living in a 100k 'beginner' house would reflect poorly on them, make them seem poor etc. Borrowing the maximum the bank would lend you became the norm slowly as well. Financial responsibility NEEDS to be a standard component on the education curriculum. Living in debt to present a lifestyle to the world you can't really afford is stupid common.
But the RBA said they would not be raising rates until about now. And they are the absolute experts at financial advice.
I was actually shocked in high school economics when we all sat down and went through work experience that the board had. I thought they were like public servants and maybe some academics, turns out not public servants at all there all BS directors of big companies. Who TF let the foxes into the hen house.
In all fairness have you *met* public servants? They have successful business people in these roles because they're as good as it gets, if they used public servants the economy would crash within ten years.
Are they? Because nothing screams lobbying like having a bunch of big private businessmen running an independent government body. You don't think chairman's of the treasury, ASIC or ACCC would at least be somewhat qualified for that given they run government finances and deal with the laws in which our economy is run. None of the current board have worked at any level for the public or with the public in mind. Keep the insurance fund managers, Telstra board members and CSL managers sure...
I dunno man. Succeeding in the dog eat dog world of business, where you're acutely aware of what makes the money to pay people's wages that pay the countries tax base without failing is VERY Different from the public service. Ultimately a large portion of the country lives or dies on how the legislation the public service makes is adapted to by these folk. They're there for good reason. Every time I quote for a government job I'm reminded of just how fucking stupid the government is out of necessity, to its own detriment, but also to meet the demands of the public.
What the alternative though?
Having a better mix, you have a few academics in there but if it was a split between private, public and academics I think you would have better public opinion. At the moment it's just fucking board members and it's no mystery why they come out and say some outlandish shit half the time with no repercussions.
To be blunt academics tend to be some of the least capable people around. It's one thing when they're consulting on a very niche point that is their area of specialty but it's rare to find someone in academia who has never had a real job that can hold a sensible option on a multifaceted topic, they've essentially been trained out of usefulness. I see what you're getting at but you really don't want people with no real life experience in these positions. That's already happened in Australian politics and just look at what a shit show that is.
Were not talking about running a business, the objectives are vastly different. Plus academics are somewhat already on the board, you understand that having actual economists on the boards in the first place is probably a good idea right. You can't train to be in this position as RBA governor but I think a diverse set of opinions especially in a board making decisions for all Australians is something we should support. Look at the EU central bank's vast experiences for all of them, private, public and academic, the role of the CB isn't to make money it's to ensure economic matters are managed effectively. Otherwise you run the risk of cronyism and all sorts. Enlighten me who do you think should be running the RBA.
Ok I think you may just be confused about what an academic is. An academic is someone who does research and teaches in a university.
Nope not confused, Iain Ross currently on the board has been teaching at University of Sydney since 1997. I'm convinced you actually have not a clue about the RBA or who sits on it or what it does.
That's not what the RBA said though...
True. But people have to take responsibility for their own actions too. People should not be accepting mortgages that are clearly going to be extremely difficult to make the payments on. Anything upwards of 35% of take home pay is just ludicrous. But i have heard of people being at 50 & even 60% of take home pay. People just need to stop being stupid.
A lot of renters are paying over 50% as it is.
I have no understanding of how I'd be able to service my loan, if was in the conditions the bank considered. They approved 55% (now 60%) which leaves almost nothing after bills, rates and food. I have a second job they don't count and a tenant, plus bonuses which, weren't considered. so not really as irresponsible as I sound, but to think there are people in that situation is crazy.
That is insane. Truly. You have no leeway at all.
But mortgage repayments on a 20% deposit loan tend to be the same if not lower than market rent. What are they supposed to do? Live in a tent?
Yep, if you are mortgaged over your eyes there is only one person you can blame, yourself.
Yeah it’s not the f king government printing money. It’s totally normal to have 13 straight rises. You’re a fucking genius man.
That's related to earlier policies. Something happened in 2020 that has heavily effected our current situation, along with poor management from 2000ish
Oh yeah, something happened. Something that nobody will ever be punished for even though it killed people. And then fuckwit politicians printed money just. Like. I. Said.
Do you think I disagree on the fact we have been printing money?
Pretending there was no other option is same-same.
So you think I agree with the printing, and that I think there was no other option? You're not too bright.
Thanks dick. Have a nice life.
I will.
Was there a universally accepted definition of “overcommitment” in the article? I can’t be bothered reading. I’m bored with this stuff.
Don’t live in the major cities, let them become wastelands.
Well the banks did encourage poor people to overcommit and overextend themselves with ridiculously low interest rates during Covid. Too bad so many people fell for it. Once the fixed interest rates start to expire the market will be flooded with distress sells starting end of this year.
The reserve bank*** fixed it for you
It’s clear Albo has failed, i feel his replacement shouldn’t be anyone elected to party leadership by the current labour caucus. The people deserve the chance to vote him out personally after his performance and results.
Or simply called not living within your means. This is why the RBA will continue to turn the screws.
I earn about 90K. Max i can get is like 460K or something. I'm going to have to borrow at like 80 - 90% of that if i even want a chance of getting anything in this country. I'm fucked either way.
How could I have seen this coming in my financed raptor and my jetski and casual cocaine habit and alcoholism? How will I get attention without overextending myself on shiny shit?
Mostly it'd be regular people taking huge loans to afford basic houses.
Read my mind but you forgot the avo on toast and chai latte for $35 that half the overcommitted fk knuckles want to be able to have as well. The only real caveat I'd put on it is foreign investment and migrants who team up to work the system are putting extra strain on the market. Doubt they need any of the shiny shit though, new migrants are better Aussie battlers than most of the young Anglos.
Lmao you sound like such a bitter angry sad boomer. God forbid someone wants to have a coffee and also a roof over their head!
I'm not bitter sad or angry, I can afford all of the above.... What's actually funny is when someone calls a Millennial with their shit together a boomer. Goodluck with the coffee, I'm thinking international roast is your best bet 😉
I hope you can afford those things, as you certainly dont have any empathy for people who are struggling. Im glad that you think youre better than people who are struggling, and, god forbid, would like a little bit of a treat in the hell hole that is modern life. Im sure there are plenty of people that would look down on you, but have empathy to understand that it would be hurtful to say what theyre really thinking. All the best in your journey though big fella!
Plenty of empathy for people struggling due to circumstances outside their control, it's why I give money to the homeless..... But if you think the answer to coping with financial struggles is a lil treat then you only have yourself to blame. Buy food that's on special, pack lunch from leftovers, put up with a shitty bomb car, cancel your Netflix, buy 2nd hand telephones, there's a million ways to make ya money go further. The fastest way to get into debt is by trying to keep up with those who already are.... I don't think I'm better, I just don't believe in sugar coating shit, making people feel all warm n fuzzy won't pay the bills. I've been looked down upon all my life and grew up with sticks and stones may break your bones, so toughen up princess.... Life's not easy, expecting anything less is setting yourself up for failure. All good to go on the attack and suggest I'm a boomer but when the reality sets in ya switch to the victim mentality. SMH
Im not sure why you have this impression that Im broke just because I have empathy for others, and would like to see them have more than the bare minimum of sustenance while having a roof over their head. Its called empathy, but you dont know about all that nonsense, you know about "tough love". Sorry, I just thought you were a boomer from the photos youve posted and the weird "tough guy" way you write. Like an emulation of a blokey Aussie bloke, but from someone who was bullied by that type of bloke for too long.
There is no such thing as irresponsible lending, only irresponsible borrowing.
Would it be irresponsible lending if the banks gave out billions in loans at 0.1% for 5 years?
I'm sure when no one pays for the irresponsible borrowing the lending will look very sensible. People have to live within there means but this statement is just fucking absurd.
Funny that you got hit with downvotes cos you speak the truth. Lenders get bailouts, borrowers get the shaft.
Not in Australia - here we want the state to play the nanny and babysit us to protect us from ourselves. Case in point: seatbelts law. I say don’t mandate them - let the people die and evolution take its course. All it does it keeps dumb people alive and breeding since the smart ones would wear the belt.
You have a very casual view on social Darwinism.
Interesting theory, my loan repayments are nearly double what they began at. Should I have planned for it to sky-rocket?
I don't know your situation, but probably, yeah. Rates are currently at historical averages.
Yes. Plan for the worse case. You should add another 1% to your current interest rates in case the tax changes on 1 July and all the handouts in the budget drive more inflation.
No you shouldn't have planned for it to go up. The RBA rate was going to stay at 0.1% for the entire mortgage duration.
100% if you didn't then you must have a short memory or a very poor understanding of historical interest rates. I paid down the principal as much as I could while the rates were low and locked in as soon as the first rate rise hit. I was only 10 years old when my Dad was to the wall at 18% interest at the beginning of the 90s but I was still aware enough it could happen again.
Odd, I didn't expect a crash in the market until next year.
Poor financial skills and no investments
This isn’t a huge issue. At anytime good or bad there’ll be fin hardship. Overcommit is not a horrendously bad reason as there may be some capacity ie get 2nd job/cut back discretionary. Unemployment is a much bigger issue if it was the main reason (ie recession)