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Hmmm - not an economist - but it looks like they are considering counting any property whose interest payments are funded by rents to eligible for commercial rates.
That's huge. It will be fine if you have a big income from other sources and low LVR - but its gonna hit full-time investors are retirees big time. I wonder how much the rents will go up before they reverse it?
And all due to happen by July - surprised there hasn't been more debate in the media
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Investors have an incentive to load up debt on rentals to the maximum.
The RBNZ sees this as a threat to our financial system in case of a housing collapse.
By classifying exactly what is the definition of a property investment loan, this will allow that category to be targeted specifically in future.
The first requirement will be forcing the banks to hold more capital for these loans.
If measures such as debt / income ratios were ever introduced in future, it will be a lot easier for the RBNZ to identify exactly which loans these measures would be applied to.Last edited by speights boy; 05-03-2015, 06:14 PM.
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I would have thought it was pretty easy - start with all the properties owned by LTCs and QCs - they don't even mention that.
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Just remember the banks are there lend and without property investors they will be seriously out of income. Yes the RBNZ will carry on and try to make it hard for us. They are basing their policy on oversea's experience, foolish.
Somehow they have developed the notion that rental income is not a secure income.
Well their job income ain't secure either as a few of the RBNZ staffers found out yesterday.
One can insure oneself against being made redundant and maybe they should require renters to do that.
If one reads Rodney Dickens you will soon see that the RBNZ wouldn't make it through NCEA if their ability to statistically forecast anything was marked.
They are so far wrong on their forecasting that they should be like all the economists, banned from sooth saying.
They, Treasury and their ilk are bad sources of info and making decisions based on that has and is causing a lot of grief for NZer's.
Read up on Rodney.
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So if you have five or more properties can the bank call some of the debt back? Like for example if I was sitting at 20% equity across my properties and the new law was 40% would they call it back? meaning I would have to potentially sell one or two?
Thanks
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How much more expensive are commercial rates?
I thought commercial loans just required bigger deposits - 40-50%.
Who will be squealing if rates go back to "normal" 8%?The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.
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