(19-01-2022, 08:55 AM)Magoo Wrote: the borrowers who cant borrow will never get into debt, that is true.
but its not the debt that gets you, its the repayments.
your asset is of ne less value from your inability to maintain the loan.
The repayments are calculated on the debt. If the mortgage I had to take out for the house I bought almost a year ago was half of what it is now, interest rates could jump to 10% and still be less than what I'm paying right now. At 15% it'd be about the same. If it jumps to 10% now, we'd be stretched financially. 15% and we'll have no choice but to sell the house.
The total cost still ends up being me paying back 2x what I borrowed - regardless of whether it's $500k or $225k. The total being the difference between the bank getting half a mil back, or a whole million over 30 years.
Banks made billions in profit still during the pandemic while plenty of households and small-to-medium businesses suffered. I don't own a microscope small enough to find the tiniest violin in the world to play for the banks' sad feelings about having to forecast for less profit.
"But other parts of that law change, designed to ensure that lenders were lending to people who could afford the sums of money they were borrowing, have apparently been too restrictive."
So banks have to offer people lower mortgages than they would otherwise offer, meaning that buyers come into auction rooms or enter negotiations with less money, meaning sellers have to adjust their price expectations based on what people can actually afford?
I'm not seeing a problem here.
Banks only lose out on having a bigger profit on the mortgages they lend; otherwise they wouldn't lend money at all. The only "losers" here are those selling their houses, but given that house prices have been on a merry fucking gallop ever higher and higher.. The only true losers would be sellers who have bought recently and are selling. That *could* be me if circumstances change and it wouldn't be awesome but.. if the market realigns to be better in sync with peoples' incomes rather than what banks feel comfortable giving away, then the market I have to buy back into is far less shit.
The only spanner in the works here is property investors who hoard houses like fucking gremlins. If Christchurch has proven anything, it's that "MORE SUPPLY" means you end up with investors flocking to that market to snatch up the bargains, which end up driving prices up. Making houses cheaper is a good move but the Government has to do something about restricting investors if it truly wants to help out young Kiwi families and first home buyers.