For many off the plan property investors, this year is turning into a nightmare. Many investors have brought apartments off the plan before their buildings and apartments have been built. They lay down a deposit and pay the remainder on settlement when the keys are handed over, sometimes as much as 2 to 3 years later.
The banks have started to restrict credit, especially to property investors, and for many of these off the plan investors, they are running out of time to secure a loan before settlement. Westpac has recently lowered LVRs to 80% for property investors, requiring them to commit a 20% deposit. Banks are also frowning on investors with portfolios exceeding $1 million dollars.
The tightening of credit is the beginning of the final phase of what bankers like to call the “economic cycle”.Like most of what bankers do, it is shrouded in mystery and executed with smoke and mirror tactics. Although in truth it is just a blatant scam and we fall for it every time.
Bankers, as we know, have been lending money around the world willy nilly knowing that a lot of those borrowing would not have the means to repay the loans.This did not matter as the credit bubble created in the form of money that has never existed would eventually burst and allow the bankers to mop up all the tangible assets.
For every dollar a bank has on deposit it can lend at least 10 sometimes much more.So if you have 100 dollars in a bank account,that bank will have lent out a $1000.
This is called fractional reserve banking and it is this system that keeps everyone on a knife edge. As the “cycle” moves on bankers tighten requirements so they will either make more money with a higher interest loan and put people on the edge of collapse – or they will just take the asset.
The key factor is that the RBA is not a benign government body looking to further the interests of the Australian people .It is instead a charade, of very private bankers with very different intentions. The Fed in the US is a similar animal, not at all what it is purported to be. Boom and bust over and over is the methodology of these people and they insist that this ridiculous system is not able to be changed.