Elisa Barwick Reveals The Canary In The Australian Mortgage Bubble Mine Just Died: Be Warned!
Ever heard of a company called Deposit Power? It's a property finance company in Australia which essentially operates by providing bridging finance for people to put up a deposit to obtain a home loan given a guarantee certificate or bond.
One of the true signs of instability in a market is just this kind of behaviour. The inability to obtain finance should be one of those market regulating mechanisms that determine supply and demand balance. Loans that operate only to obtain bigger loans break the financial laws of gravity in a way.
That undesirable reality is not a good selling point however and according to their website here, Deposit Power is actually in the business of providing "the freedom to purchase property, guaranteed!"
Sounds wonderful doesn't it? Well few things in life are that simple and that "guarantee" isn't worth much now given that Deposit Power has collapsed.
Their website I linked to above is now adorned with the following:
UPDATE 01/03/2018 – Notice to stakeholdersPlease see the below PDF attachment for an update regarding Deposit Power
Please email [email protected] and we will get back to you as soon as we can.
If you have any claims enquiries, please email [email protected]
You can download the notice to stake holders from there, a clip of which I've posted below.
This story was picked up by the Australian Financial Review and also by the CEC Report in the video below. Deposit Power collapsed when the NZ based CBL, their underwriter, collapsed. This already amounts to a "domino style" failure in mortgage related finance providers.
Elisa Barwick is an executive member of the CEC and editor of the Australian Alert Service and along with Craig Isherwood (founder and leader of CEC), she does a great job of explaining the situation in this video.
According to Elisa Barwick:
10,000 investors and nearly 300,000,000 dollars worth of housing deposits are at risk here and if you consider that those 10,000 investors are buying perhaps houses at around $1M which is the median cost in a lot of suburbs in Melbourne and Sydney, that could be $10B worth of property sales that could be collapsing as a result which could have a major impact on the housing bubble. The company itself also has links to major mortgage brokers and major banks so obviously there is going to be a flow on effect.
The fact is that the economy is no longer strong enough to support people such that they can save for a deposit in this market which is why people turn to third parties such as Deposit Power to secure deposit loans.
This situation is exacerbated by government policy and ineptitude in the regulator space that has caused this indescribable property bubble in the first case. This is now a speculative economy which has destroyed the ability of those pursuing property for its primary purpose to obtain it.
The Australian Mortgage Bubble Mine Canary thanks to giphy
thats pretty scary. Hopefully with housing bubble bursting money will flow from property into crypto causing that to come back up, thus allowing people like us who have accumulated a nice position to fully escape the fiat world
Would be nice yes, however it'll come at the cost of much pain the community. Self inflicted you could argue but pain in a society is generally shared. Scary is right. Excellent choice of word.
Choosing words is easy, arranging them in a sensible way is the true artform haha. Normally i garble nonsensicle dribble.
To be honest, the community needs an injection of pain. What other generation has never felt the pain? My parents had the recession and high interest rates of the Keating Government, their parents the great depression and WW2, their parents WW1 and early colonialism, before that Victorian famine and poverty.
Todays generations worse problem is slow internet.
I don't particularly want high interest, poor and destitue people and general gloomyness, but by god the country needs a kick in the nuts to stop it being so entitled and spoilt.
To listen to the audio version of this article click on the play image.
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That's scary. Hopefully the dominoes don't start to fall! We've already been through this once in the last 10 years, we don't need it again. Although, it really is a shame that we couldn't learn from the first time and put things in place to keep unqualified people from getting loans on houses. That's greed for you though, I guess.
OMG. Shit just hit the fan. I need to delve more into this.
Australia and New Zealand's housing industries are in great condition, what are you talking about?
http://www.abc.net.au/news/2017-09-11/500b-dollars-of-liar-loans-in-australia-ubs/8892030
http://www.abc.net.au/news/2016-10-07/mortgage-fraud-systemic-in-australia-ubs-survey-shows/7911978
http://www.news.com.au/finance/business/banking/westpac-anz-investigate-suspected-chinese-foreign-home-loan-fraud/news-story/310603c6bd4bfec7db894539cc738972
http://www.news.com.au/finance/business/banking/mortgage-fraud-is-the-dirty-secret-that-could-spark-a-financial-meltdown-economist-warns/news-story/53bf8bf125b31e39e0d05c61b3f34d06
https://au.finance.yahoo.com/news/overstated-income-30-liar-loans-continue-grow-030518341.html
:D
Look out below!
The double-whammy will come when Australia's export market grinds to a halt after they realize the Chinese were buying raw materials for goods the world didn't want just to keep up the appearance of growth, all piggy-backing on an explosion of Chinese debt backed by their own wild housing and building construction sprees.
To protect against the housing downturn I have gotten short avocado, poached eggs and toast futures. Millennial home owners won't be able to afford their Saturday/Sunday brunch dates when interest rates revert to their mean and the property bubble bursts. That is my thinking behind my hedge.
Disclaimer: Not financial advice, just a joke! I have no such position.
So when the home owners try to renew their mortgages they will not be able to? What about all that capital they put into it? This might be a good time to get in to the market later this year for some people like multimillionaires.
Bailins are coming to Australia. Buy bitUSD, some nubits for USD fixed assets. Some unpegged assets like Steem, gold and silver wouldn't be a bad idea either.
Wow very interesting times we live in