Financial Armageddon!!

[eri]

^

who wants to live longer

if it means living alone

[Davo36]

Bill's saying 'be careful!'

English warns highly indebted home buyers about risks of higher interest rates and lower net migration; says ANZ's tightening of lending criteria suggests market near 'risky level'; doesn't want US, Irish-style slump

Posted in News June 07, 2016 - 12:23pm, Bernard Hickey






By Bernard Hickey
Finance Minister Bill English has warned highly indebted home buyers that a forecast sharp fall in migration at the same time as rising interest rates could put them under pressure.

Link

This is of course by Mr Hickey, who was sure the market had peaked several years ago and sold up and moved out of Auckland.

[Bluekiwi]

Hickey and "The Sham" sing from the same hym book, and Blingish has been warning us for some time now.

But....

Concrete is out to 6 weeks now and tradesmen getting harder and harder to find, I don't see housing supply coming to the rescue.

But the RB in their ivory tower are working on some powerful magic so something could be on the cards..........

[Cpt707]

..the RB always making up rules as they went along....some things don't change....and it's been a long long time....

[Davo36]

But the RB in their ivory tower are working on some powerful magic so something could be on the cards..........

I wonder if they ever feel despondent. Because everything they do either does nothing or makes the situation worse!

[Perry]

As they're largely immune to the consequences, what does it matter?

Much like the gummint woodenheads the RBNZ pays stealth tax to.

[Davo36]

This is pretty huge isn't it?

Banks cut off lending to foreign property investors

Westpac and ANZ will no longer lend to overseas-based buyers of New Zealand property - with other banks expected to follow the move to shut the door on foreign investors.

The restrictions follow moves by Australian banks to stop lending to foreign buyers of property.
Westpac New Zealand has announced that from today it will no longer lend to non-resident borrowers with overseas income.
Borrowers on temporary resident visas will only be accepted if they have both a New Zealand address and a New Zealand-based income.

Residential lending is the banks' business, the thing that makes them money. And they've all been growing their lending portfolios as fast as they can over the last 20 years. And making record profits as they have done so.

So for them to even wind back a little bit is astounding to me.

They must be pretty nervous I reckon.



And check out the Herald:

The Big Read: Nation of debt - ready, set, crash

"We've almost got the perfect storm," says veteran fund manager Brian Gaynor as he reels off the many reasons New Zealand house prices and debt levels are soaring to precipitous heights.

This to me, is actually a counter-argument to the banks move. Because whenever they say in the papers a crash is coming, it does, but like 3 years later.

So if the papers are saying it's all doom and gloom, then it's almost certainly not. And also, fund managers constantly say residential investment is stupid, unfairly taxed, blah blah blah. And they're always hoping the property bubble will burst and the money will miraculously flow over to them to charge fees on. Of course it never works like that, cause when the propery market goes, so does the sharemarket.

Interesting times...

[Perry]

Don't most of these o'eas bogey buyers come with o'seas loot?

[Wayne]

Residential lending is the banks' business, the thing that makes them money. And they've all been growing their lending portfolios as fast as they can over the last 20 years. And making record profits as they have done so.

But loans to overseas people is such a small part of that business that any loss could come out of their advertising budget - it looks good.
Also, the banks know the people overseas will be lying about their income and it isn't worth the risk.

[Beano]

But loans to overseas people is such a small part of that business that any loss could come out of their advertising budget - it looks good.
Also, the banks know the people overseas will be lying about their income and it isn't worth the risk.

Yes i find most people grossly understate their income too.
Its just the old kiwi way of doing things

[Bluekiwi]

I am surprised people from overseas, can borrow from NZ banks and buy property anyway, I thought the money was coming from China to buy Auckland property.
So Banks should cut down on this, and I heard it is due to mortgage fraud in Ausie this is all happening anyway, and it seems it may be a small part of banks lending anyway.
I have a suspicion they were applying for finance from NZ banks due the delay in getting money out of China, so this new ruling could just create a short term drop off in demand like what happened 1/11/15.

What they are stomping out is creative evidence of overseas income (apparently they had found a way to tick all the box's to get applications accepted).
I also heard someone say its also a way of money laundering, buy buying Auckland housing, getting a mortgage, then quickly paying it back (our banks don't care where the funds come from), but not something I know much about.

[eri]

kiwis in switzerland etc

can borrow swiss francs to buy here

as swiss can borrow to buy french, italian or german property

business should know no borders

protectionism

is what hamstrung the global economy

since money was invented

there are those that want a return to

the dark old days of greatly limited trade

but am surprised any of them

live on a small island trading nation

[Perry]

Trade tariffs were an equaliser - they were not always protectionism unqualified. The word protectionism is oft used as an evil bogeyman, wrongly so, as often than not.

[Wayne]

Borrowing a foreign currency to buy a property opens you up to exchange rate risks.
I think it also opens up some tax complications as you have to account for exchange rate movements.

[Nick G]

It is very very risky because the LVR rules in the currency you're borrowing in can mean that you get margin called if the NZD drops. In 2008 the rising yen wiped out a lot of investors.