Hello rebel1 well said. Excuse me for stepping in uninvited here all - not usually on this thread a bit off topic for me.
Nice to see some truth on property here, vbeery refreshing to read enlightened views. I recently spoke to a Fund guy up in Singapore and he told me the NAB was holding cocktail parties in HK, Sing etc trying to lighten their Qld property load. I checked one of the properties he mentioned they indicated 6-700k as an example of the offering - in the back of the canals in Surfers Paradise. It was on realestate.com for A$990k. A 30 - 40% discount!
When he asked about finance he got a flat refusal. There is a lot they are not telling you about the exposure of the big 4 when you take mark to fantasy away from valuations as you point out rebel1.
They had properties they would not offer as mortgagee in possession, just "helping our clients" - yeah right 'good hearted' banks! There is a damn good reason for this reluctance and cover up.
A performing loan is a 10% risk weighted asset in bank speak meaning a 10% reserve allocation is required to be held by the bank. When they declare the loan non-performing it becomes a 100% risk weighted asset - with 100% of the outstanding loan amount now required in the reserve allocation ...whoops big problem on the balance sheet!
Huge risk in this market, I have publicly warned investors for the last few years that this was coming and it has now arrived. How covert did the risk remain when there was still a chance to exit this illiquid asset class!
DYOR and best regards, CW PS if this has been covered already then I apologise for duplicating the information and offer thanks to whoever took the trouble to inform. PS Position (?) yes I own the house I live in my wife would not let me sell.
