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  1. #5171

    Default

    Quote Originally Posted by Nick G View Post
    I don't know why people fix debt they can't really afford to increase by a lot for only 6-12 months.

    3/4 of my debt is 3-5 years locked in. I'm missing out on the best rates but...
    I’m with you there. Lock in that insurance policy. If rates start to increase you have a number of years to rectify the coming issue.

  2. #5172
    Join Date
    Sep 2008
    Posts
    7,575

    Default

    each situation is different

    my LVR is about 10%

    so chasing the lowest rates - 1yr

    makes (sic) cents
    Last edited by eri; 26-09-2018 at 08:10 PM.
    have you defeated them?
    your demons

  3. #5173

    Default

    Yip hence I said "can't afford".

  4. #5174
    Join Date
    Sep 2008
    Posts
    7,575

    Default

    ^

    smart

    build the insurance in
    have you defeated them?
    your demons

  5. #5175
    Join Date
    Sep 2004
    Location
    Hastings
    Posts
    14,876

    Default

    Quote Originally Posted by chook View Post
    We are in the early stages now, even though most people would have no idea.
    What are the signs you are seeing?
    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

  6. #5176
    Join Date
    Jul 2016
    Posts
    101

    Default

    Quote Originally Posted by chook View Post
    The big problem and i mean BIG, is the level of personal debt or mortgage lending and more importantly the massive volumes of money we are talking about with these mortgages. There is no room for movement when things go bad. Davo is right its going to be massive, plenty of people will lose plenty of shirts! Its going to kick off in Aussie first then hit our shores.
    We are in the early stages now, even though most people would have no idea.
    It's more than this Chook. It's completely systemic as our system requires more and more capital (read: debt) in order to inflate asset prices in order to reduce volatility and maintain stability. The problem with this is that high debt volumes was the cause of our previous crises and Central Banks responded with a double-hit of low interest rates and quantitative easing (excess bank reserves) which led to a massive hosing of debt liquidity into the system.

    From what I understand a small contraction in our money supply will have a massive flow on effect to asset prices. This is somewhat akin to chaos theory (i.e. a butterfly flaps its wings and causes a hurricane in the distance). Once asset prices begin to turn and fall then you see a race to the narrow exits (panic) which further drives prices down.

    My biggest fear is the timing of this next downturn is far more inconvenient than the previous ones, i.e. you have a large swathe of the population (baby boomers) heading into retirement with almost all of their capital tied into real-estate and financial assets.

    I couldn't warn people enough how severe this turn in the cycle will be. This will be my last warning and I need to spend more time learning how to mitigate the downside.

  7. #5177
    Join Date
    Sep 2004
    Location
    Hastings
    Posts
    14,876

    Default

    For the baby boomers who have rentals of whatever sort, the problem will only be: can the tenants afford the rent?

    The underlying asset figure (value?) is irrelevant.
    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

  8. #5178
    Join Date
    Jun 2013
    Location
    Memphis TN
    Posts
    141

    Default

    It's hard to find solid evidence of the sky is falling scenario. There are fewer people with silly debt now than the GFC and people are using much cheaper interest rates so debt servicing is easier. Where is there any evidence of massive debt increases with no room to move?

  9. #5179
    Join Date
    Sep 2004
    Location
    Hastings
    Posts
    14,876

    Default

    Quote Originally Posted by Memphis Turnkey Property View Post
    Where is there any evidence of massive debt increases with no room to move?
    As one blessedly free of any such debt, I'm not qualified to answer.
    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

  10. #5180

    Default

    The homeowner market in Auckland?

    Quote Originally Posted by Memphis Turnkey Property View Post
    It's hard to find solid evidence of the sky is falling scenario. There are fewer people with silly debt now than the GFC and people are using much cheaper interest rates so debt servicing is easier. Where is there any evidence of massive debt increases with no room to move?
    Free online Property Investment Course from iFindProperty, a residential investment property agency.


 

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