pomtastic

Hey Longreach, Mr debt peddler.

Don't you think that if someone can't afford a mortgage the 'conventional' way, that is, pay off principal and interest then perhaps they shouldn't be in the market for a home loan at all? It's crap loan ideas like these that got the US into a mess, you know, NINJAS, sub prime, Alt A's, Option Arms.

Anyhow, here's some food for thought, 13% of non conforming mortages are now 30+ days behind in repayments in Aus. This was at the end of Dec 09 and there's been several rate increases since then. Conforming loans are loc doc loans, you know, Australia's own little sub prime market.

http://www.theaustralian.com.au/busi...-1225871961204

Fly Away

Looks like the market has slowed right down due to the interest rate rises;

http://www.news.com.au/business/brea...-1225877404347

Incidentally, we had an 'offsetting' or 'Current account' mortgage in the UK from 1994 onwards. The first one we had was from 'Mortgage Trust' I think, but before we left, we had moved to The Woolwich. Hardly a new invention.

If you are disciplined, they are a great idea. We always paid our repayment as well as our interest -you could chose to be interest only.

At one point we had credit card companies offering us thousands in interest free loans for say 6 months at a time. We would take a cash advance from these cards at say a 1% fee and offset it against our mortgage at say 5%, thus getting 4% gross untaxed income on the borrowed sum. We obviously paid the cash advance back at the point it became interest charging.

I doubt you would be able to do this at the moment, but it was fun while it lasted!

ABCDiamond

I am surprised it is as low as 13%. These are after all, often the loans that the main banks tend to avoid due to risk.

Non Performing House Loans

Australia and Canada are the lines running along the bottom



An interesting question is what % of the total do the non-conforming loans make up.

freebo

Australia and Canada are simply the end of the curve, i.e. the bubbles yet to burst IMHO

Nice work on finding the charts BTW

BadgeIsBack

Mechanics. All mortgages - well the ones we are talking about still require repayment. Well otherwise, the line of credit starts to rise....and then blows...

We were offered 2 options - 1) offset - ie. 2 accounts, or 2) the all in one too.

Maybe I am a lazy f**ck but after using my offset for 2 months and wacking 10k in it one month - the largest income I had at the time, the interest we saved was so disappointing that I never bothered with all the gamesmanship...(!) and just went back to the traditional model.

coolshadows

Looks like interest rates will be increasing in August again (by 25pts). Inflation is creeping up...

Inflation risks building

coolshadows

Interest rates might actually go up this month, regardless of the RBA...

Banks under pressure to raise interest rates independent of RBA hikes