Mortgage Stress timetable - Australia
House prices likely to cool as stressed buyers sell
On figures
put together by the UBS banking analysts, the potential expiry of IO loans in
coming years will surge up to more than $100 billion in the 2018 financial
year.
Assuming
the typical five-year maturity and no rollover to another IO term, almost $140
billion of IO loans will have wound up by 2019, a figure which jumps to $153
billion in 2020.
Interest-only
loan a no-go zone
The typical
investor loan makes no sense at all given the recent targeted rate hike by the
big banks, writes Stephen Letts
A survey by
UBS of borrowers found that the majority under financial stress from higher
interest rates would cut consumption, while a significant share would sell
their property.
But that
might be just the start, as "Phase 3" of APRA's macroprudential
tightening may well start next year.
Phase 1 put
a speed limit on the Big Four banks investment lending, capping growth at below
10 per cent a year.
Earlier
this year Phase 2 was enforced limiting IO loans to 30 per cent of new
residential mortgage loans.
Before that
tightening, IO loans accounted for up to 40 per cent of the banks' mortgage
portfolios, which APRA noted at the time was "quite high" by
international and historical standards.
Phase 3 is
expected to zero-in on the net income surplus (NIS) — or a lender's assessment
of surplus income borrowers have left over after living expenses, debt
repayments as well as some "pocket money" — as well as loan-to-income
valuations.
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