I am looking for comment on last Monday Night's program about the Mortgage Meltdown in the US. Do you think that this is going to leed to more conservative lending for Residential Investors?
http://abc.net.au/4corners/content/2007/20070917_subprime/interviews.htm
The answers is yes it has affirmed already tightened lending.
Lending products have already been withdrawn from the market relating to loans which might be considered similar risks to that outlined in the story.
I don't think that lending practices in Australia have been immune to the sort of conduct described in the story. Its certainly hasn't taken place on such a scale nor has this part of the market developed into a segment of tangible size one would assume.
Have Australian lenders lent to people in similar circumstance to subprime ratings?
If anything I think we saw lending tighten some time ago when the Sydney property market came off the boil. We're talking some time ago. The number of mortgagee in possession sales started to increase well before the subprime meltdown in the US. Lending was probably under review for over a year prior you would think.
In the Age it was estimated that 113,000 mortgages will have to sell their houses if interest rates increase due to the US meltdown. Also 600,000 home owners will experience mortgage stress. http://www.theage.com.au/news/BUSINESS/Mortgage-stress-rising-rapidly-survey/2007/09/18/1189881491965.html
Also 41 billlion is owed on credit cards
http://www.theage.com.au/news/business/credit-card-debt-hits-record-high/2007/09/20/1189881683182.htmlalso mortgage brokers will be more regulated
http://www.treasurer.gov.au/tsr/content/pressreleases/2007/077.aspThe biggest risk is the low doc or no doc loans
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