The only certainty one has in life is that CHANGE WILL ALWAYS HAPPEN.
Adding to that :
“IN CHANGE THERE IS OPPORTUNITY”
With interest rates dropping so low as they have in the last few years, in the last week, a reversal has occurred, for most property investors anyway.
Last week 3 of the big 4 banks announced interest rate increases by up to 0.29%
Read it here yourself what they’re doing:
ANZ : Click Here To Read
COMMBANK: Click Here To Read
WESTPAC: Click Here To Read
NAB: Click Here To Read
In summary: ANZ & CBA are increasing their rates by 0.27% to investor loans.
NAB is increasing its rates by 0.29% to interest only loans (owner occupier & investor loans).
Westpac has yet to change its interest rates to investor loans as their IT system currently does not allow them to differentiate between owner occupier and investor loans.
But I am sure it is coming….
Not only that, some banks, including Westpac, Bank of Melbourne and St George, are requiring SMSF’s to stump up more deposits (30% now, versus 20% previously) on borrowings, so that the bank is only lending up to 70% LVR (loan to value ratio).
That allows them to reduce their risk and lend less money out at the same time, in order to fit in with regulatory requirements.
Well that’s the news….
My thoughts on this are:
1. It’s Not Necessarily a Bad Thing
With prices going “CRAZY” high in places like Sydney and Melbourne, it is completely unsustainable.
If you look at China and the recent stock market crash, it’s because the market got so completely out of hand and there was no “handbrake” to at least slow it down along the way.
APRA has seen what happened in the GFC when finance was easy to get, everyone who could borrow did, and spent the money liberally, only to realise they had to pay it back eventually, with interest.
If the bubble pops, everybody loses…
2. See It As a Warning – and Take Heed.
I always say: “You Make Your Money When You Buy, Not When You Sell”.
What that means is that you create your profit at the point of purchase, as that is the only part you can control.
What you sell for is at the whim of the market, what someone is willing to pay on that particular day, and this you cannot control.
So whatever purchasing decisions you are making, make sure that if the market pulls back by 10-20% as it did in 2008/2009, you will be unaffected.
3. Maybe It’s a Good Time To Sell.
I am. Lots.
All my 13 blocks of land are sold now (1 subject to finance) in my development and we are getting great prices.
Nothing wrong with cashing up and looking for the next bargain beal.
Yes I will have tax to pay but if the market pulls back, I will have lost that money anyway.
Billionaire John Templeton once said (and I paraphrase):
“Help people, when they are desperately wanting to sell, help them and buy; when they are desperately wanting to buy, help them and sell.”
4. Get Upskilled and Educated.
It’s a rough place in the market place.
Get real:
Just because you make $100,000 in your job, don’t think you can do the same in the property game without training and expertise.
Medical professionals are notorious for this…
With no training and expertise you are simply gambling!!!
Also don’t be fooled by the hype and the TV shows, invest IN yourself.
This is a long term game, and when you lose $100k it hurts.
I know I’ve done it before , more than once!!!
Til next time,
Nhan
