banks tightening lending, page-2

Hi Kincella,

A loans guy I know with his own business in SEQld here recently told me that they were getting plenty of low doc loans approved via Westpac at rate 6.31% & would loan up to 80% on a property investment. You'd think they would have really tightened up on low doc loans now I thought yet instead are making it difficult for a FHB with a good job or this does make me wonder how scared they are of how bad the economic situation could become & don't want any comeback from encouraging a FHB into the market just now?

A farmer friend in Gippsland area (1 hr west of Melb) told me 2 weeks ago he went to the local bank to ask if he could loan more money & use 2 acreage blocks of land that were on the market but not sold as collateral & he said they told him it was no problem at all even though they had no income from them or any income from farming at the moment - he was surprised that they would lend that easily with no income & I said I don't trust them (it was ANZ) as I see them suckering you into using your farm as well for collateral & then moving fast to repossess on the first hiccup before you have a chance to know what's happening!

A story that often plays on my mind was on TV (Four corners?) years ago about an apple farmer who had just missed 1 mortgage payment & he had sheds full of apples picked ready to go to market but instead the bank turned up & padlocked all his sheds plus put a security guard on them so he couldn't get his apples to market & make the payment instead letting them all rot & then repossessing his farm which was worth a lot more than he owed.

This was ruthless greed on behalf of the bank to make some easy money from a poor hard working farmer & I hope this still doesn't go on & do believe there is a clause in all loan contracts now that states they must allow you every possibility to make good on any missed payments & that repossession is the final option only after all other avenues have been exhausted - it's just they don't make you aware of what your rights are often hoodwinking you by moving in so quickly you don't get a chance to fight back at all (like ANZ did with OPES clients).

All should be wary of the small print in loan deals & though I totally lack trust in the banks I do hold a smidgeon of hope that they are being fair to most of the home owners who need to sell up right now. We have to sell our house at the moment too but feel lucky that we don't have a bank breathing down our neck.

Anyway, good luck with your first home buy & though there are many houses on the market it is often hard to find a really well built quality property so if you find one don't hesitate as over time you will appreciate not having to cosmetically fix up the ones that look good now but aren't built that well & fall apart down the track.