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Property investment? Risky mortgages are increasing. Why?

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Property investment? Risky mortgages are increasing. Why?

To all property buyers, please do not try to submit fake information just to get the loan approved yeah. If we do not qualify, we do not qualify. Period. Buy something cheaper. There’s plenty of them. it does not even need to be from the developer. There’s also the sub-sale property market too. Last but not least, take a look at the auction market too.

Well, as for risky mortgages or liar loans, this is something which has been reported in an article below.

Article in abc.net.au Investment bank UBS has warned that record level of “liar loans” as buyers “chase the market” could be one reason why property prices in Australia has risen close to 20% within the past one year.

The bank’s annual survey of around 900 people who took out a mortgage over the past year showed that 41% submitted loan applications that were not completely factually accurate a.k.a “liar loans.” That is a record high in the seven years UBS has collected this data, up from 38 per cent last year and 27 per cent back when the survey started in 2015. 

 Australian Prudential Regulation Authority (APRA) chair Wayne Byres said, “The issue of concern at present is that there is an increase in high debt-to-income lending, but it’s offset against a number of other metrics which are going in a more positive direction from a macroprudential perspective.”

He added, “Our supervision tells us balance sheets are still strong, lending policies are being sustained, and there’s no obvious poor-quality lending going on.” There are a lot more charts, figures and explanation in the article. Do read the full article: Article in abc.net.au

It’s important not to “overhelp” too much on the loan applications

By the way, risky mortgages do happen over here as well. For the bankers or mortgage brokers, it’s also important that you do not ‘help’ the ones who do not qualify to turn into someone who qualified yeah. Let’s stop all these unnecessary happenings from happening just because the more successful submissions, the more financial rewards there would be.

All these would be at the expense of the borrower who’s taking on risks which are not necessary. The person may be overstretched because of the wrong encouragement.

More importantly, buyers should be well informed and do not resort to such ways to buy a property yeah. The risk is yours, the rewards may not be. There are reasons why people want to encourage you to do something to afford the property. Sometimes they even help you to falsify documents. At the end of the day, after they have earned the commission, they will be gone too. Happy understanding.

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