Fears of housing 'fire sale' as interest-only loans roll into principal plus interest

**NavyDiver** · 20th June 2018, 10:19 PM

**Mick_Marsh** · 20th June 2018, 10:29 PM

Originally Posted by NavyDiver

I'll be hanging on to my house as I'm sure many others will.

If people fire sale their houses rather than finding the extra cash, they'll find they'll be homeless and owing money. It's best they find the extra cash. They knew this day was coming. They had plenty of time to prepare for it, which I'm sure they did.

**Eevo** · 20th June 2018, 10:38 PM

Originally Posted by Mick_Marsh

It's best they find the extra cash.

not everyone can do that.

i sort of hope we have a housing crash.

**Mick_Marsh** · 20th June 2018, 10:43 PM

Originally Posted by Eevo

not everyone can do that.

Poor planning on their part.

Originally Posted by Eevo

i sort of hope we have a housing crash.

Doesn't affect me.

**101RRS** · 20th June 2018, 11:05 PM

Originally Posted by Mick_Marsh

Poor planning on their part.

Exactly - I have interest only loans on some property and was well aware that they would switch - just planned for it, and in fact income from the property had gone up quite a bit so the switch was quite painless.

The 6 Ps philospohy applies - Prior Preparation Prevents **** Poor Performance.

**trog** · 20th June 2018, 11:05 PM

We switched over as soon as the initial interest only loan ended . Gave us a few years to get some savings up . By then there was no pain as we had re adjusted our budget to suit.

**3toes** · 21st June 2018, 03:46 AM

If UK experience when they made people convert to repayment is any indication most made no plans at all.

Just crying to media about big bad bank as we can still make the interest only payment. Why are they doing this to us poor customers. It is not fair.

Banks of course should have been preparing the customers for this change from day one when the loan was taken out and they do just that now.

**Homestar** · 21st June 2018, 05:02 AM

I started paying our interest only loan on our investment property back at a rate similar to what it will change to at the end of the year so I won't notice. There are a lot of people over leveraged with interest only loans though, so I'm sure some will struggle.

**Pedro_The_Swift** · 21st June 2018, 05:23 AM

It seems Westpac has around 34% of its mortgages as interest only loans,,,

and it (westpac) discounts the comparison between this and the USA sub-prime **** up..

saying it always made sure the buyer could service the full payment amount...

I'll guess we'll see,,

**JDNSW** · 21st June 2018, 05:49 AM

It is not going to take many forced sales to depress the market - and the availability of interest only loans pushed up the market. Buyers for properties that have to be sold will no longer have this cheap finance, and so will not be able to pay as much, so the prices paid will have to fall.

How far they fall will depend mainly on how many unprepared borrowers there are, and to some extent on how much this frightens other buyers (or how much the other buyers rub their hands in glee and hold off buying until the prices drop further).

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