So this is what the 'Subprime market' is all about

Discussion in 'Property Market Economics' started by DaveJ__, 30th Oct, 2007.

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  1. DaveJ__

    DaveJ__ Well-Known Member

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    DaveJ__, 30th Oct, 2007
    #1
  2. BillV

    BillV Well-Known Member

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    Dave
    Thanks, it's very funny !!!
    Cheers
     
    BillV, 1st Nov, 2007
    #2
  3. tropic

    tropic Well-Known Member

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    Yes, that's very funny.

    High grade structure enchanced credit fund:rolleyes::rolleyes:

    Related to subprime crisis, you might have heard of - NINJA loan. Loans that are offered to people with no income no job and asset.
    As long you breathe they give loans.
    In theory you can buy as many houses as you like. If you have nothing you have zero risk and unlimited gain.
    How many people on this forum would have done it???

    We have something similar here called lie doc aka low doc. Just not as common as in the US and different economic climate with low unemployment.
     
    Last edited by a moderator: 2nd Nov, 2007
    tropic, 2nd Nov, 2007
    #3
  4. BillV

    BillV Well-Known Member

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    Tropic,
    I think a No Doc loan with a honeymoon rate of 6% defaulting to 12% after 12 months would be similar to the subprime loans they were selling.
    Cheers
     
    BillV, 2nd Nov, 2007
    #4
  5. tropic

    tropic Well-Known Member

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    Hi BV,

    That's true. That's what caught people by surprise when their 8% IR went up to 12% 3 years later.
     
    tropic, 4th Nov, 2007
    #5
  6. willy1111

    willy1111 Well-Known Member

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    so how much different will that be for people here in Oz who fixed their rates 3 years ago at low 6's, and come out in 2 years time in the 9's?
     
    willy1111, 4th Nov, 2007
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  7. BillV

    BillV Well-Known Member

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    Willy
    IMO it won't be the same as most people with subprime loans would have bought their properties with the plan to onsell and make a profit.
    Additionally most properties in Oz didn't lose much value so even if some or us won't be able to afford 9% interest rates and were forced to sell, we won't be selling in a crashed market.

    Lo/No Doc loans were big business earlier on.
    Those who couldn't afford these loans have already got out and the few who are left would be in the process of doing so now.
    My feel is that those who could be forced to sell won't be losing much as currently there is increased buying activity and there is shortage of properties.

    Cheers
     
    BillV, 4th Nov, 2007
    #7
  8. Andrew1__

    Andrew1__ New Member

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    Great video. Thanks for posting.

    Andrew
     
    Andrew1__, 20th Nov, 2007
    #8