Join our investing community

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

Discussion in 'Real Estate' started by DaveJ, 30th Oct, 2007.

  1. DaveJ

    DaveJ Well-Known Member

    Joined:
    13th Nov, 2005
    Posts:
    123
  2. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    Dave
    Thanks, it's very funny !!!
    Cheers
     
  3. tropic

    tropic Well-Known Member

    Joined:
    13th Sep, 2006
    Posts:
    131
    Location:
    WA
    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
  4. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    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
     
  5. tropic

    tropic Well-Known Member

    Joined:
    13th Sep, 2006
    Posts:
    131
    Location:
    WA
    Hi BV,

    That's true. That's what caught people by surprise when their 8% IR went up to 12% 3 years later.
     
  6. willy1111

    willy1111 Well-Known Member

    Joined:
    5th Jul, 2006
    Posts:
    54
    Location:
    Melbourne
    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?
     
  7. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    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
     
  8. Andrew1

    Andrew1 New Member

    Joined:
    18th Nov, 2007
    Posts:
    2
    Location:
    Sydney
    Great video. Thanks for posting.

    Andrew