…A couple asked him to sell a two-bedroom weatherboard home in Veron Street in Wentworthville, 27 kilometres west of Sydney, for $950,000 when it was only worth about between $820,000 and $830,000. They bought the home for $790,000, two years ago.
“I asked them where they got that number from and they said that was the number they need to pay back the $200,000 they borrowed from family to buy the home as well as repay their interest-only loan,” he said.
“A lot of them initially paid $2000 to $2500 a month on their interest-only loans, and now they have to pay $4000.”
We all know how that ends.
Read the whole article:
24 comments:
Government and banksters greed has no memory or example to follow. Lol!
Nobody learns anything, any time anywhere. Nobody learns anything from anyone's example. Like ours. We are starting to forget, but the spend your equity ads have gone away for the nonce. So maybe it will take another year or two, until the forgetery machine really starts rolling
I would never loan that to a relative, or anyone else, unless said relative was dying and a rare expensive treatment would save them, and I would expect to get paid back, however slowly, if they got well enough to hold a decent job.
Australia didn't learn in 2008, because they (apparently), missed the crash felt nearly everywhere else:
https://www.cbsnews.com/news/how-australia-ducked-the-crisis/
That article is from late 2009, btw.
Sounds to me like Australia was late to the original Ponzi, and has spent the past 10 years catching up.
I completely agree that NOBODY (present company excepted, of course) learns from other people's mistakes. They didn't feel the pain then, so it was easy to convince themselves that they were somehow 'smarter' and 'different'.
I do, however, believe, people learn from THEIR mistakes, (and begin work on making new ones).
The problem with finance is that most of the people in finance made millions (or billions) before the crash, so THEY learned they were smart. But, those millions who got foreclosed on learned something.
So, while I believe the banksters will be selling the same crap they were selling in 2005 - I don't believe the market will be nearly as large. There will always be some suckers - but it won't be the whole country that drinks the Koolaid. There's already plenty of evidence that national perception on housing has shifted. Millenials either aren't buying at all - or they are waiting to buy later - and planning to stay put, instead of pre-planning on the 5-year catch-and-release schedule from 20 years ago.
I only lend if I own it and my kids pay or they lose their inheritance. If they pay then they are Getting back what they paid out. Win,Win for them and I make some % better then the bank! Rolling down the road and it keeps signing me out.
Of course, I've heard and read that renting is smarter than buying, and interest only is just like renting ... isn't it???
If you have money to cash a property but need it short term project for profit it may make sense. Especially if it has a lower rate. Those with out means should not. Renting for life is a long term loss. IMO
>Western Sydney ground zero in interest-only mortgage bust
The comments to the article are interesting.
They sound like HCN comments circa 2008.
I wonder if Australia is more likely to prosecute the banksters. They are knowingly offering loans that cannot be paid back and defrauding the bond holders.
B-MAD (Bank of Mum And Dad). Love it!
LBD, My grandmother gave loans to her children, but instead of them paying her back, she "forgave" an an amount up to the annual tax free gift limit as a way to transfer inheritance without taxes.
Bahahaha. You slay me.
Clever. We got down payment help. Our relative donors had plenty of money. We supported ourselves otherwise. Our kids are financially stable and reliable also Bank of mom and dad was very occasionally used.
And of course the profits from one house formed the down payment for the next. Some people spent it and started buying all over again.
People now spend 9 years in a house, instead of 5, as previously. Son & dil's house will be ok for them and 2 kids, but too small for 3 kids, I think. If they have that many.
Ruby, that would really be hard to prove, even though it's true.
Good morning!
Yes forgiveness works for transfer of wealth but we like treating them as adults with the discipline and pride of paying their own way. Also a family trust takes care of taxes on the state level and the Fed changes all the time and hopefully it won’t matter.
I can’t remember but gifting to a relative is $20 or $30 k.
IRS says gifting tax free is $15k/per/yr.
I've been gifted from my parents with the net effect being we got what we could have achieved on our own, just earlier. The knock on effect being wealth building compounded returned the gift to asset value to pass on to the next generation.
Concerning the article posted:
The comments are identical a dozen years apart.
Thing is Aus is way more screwed.
The rest of their economy isn't as large relatively.
China is a player and pulling back hard.
Not a reserve currency.
World banking hasn't finished digesting the previous world property bubbles.
Oh-oh.
Nobody out there?
Guess not
RIPJohn McCain
McCain was a lightning rod. Glad he's not suffering anymore.
New post.
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