1 00:00:00,120 --> 00:00:04,080 Speaker 1: Good morning, everyone, and welcome back to Sugar Mama's Fireplay. 2 00:00:04,640 --> 00:00:09,119 Speaker 1: Today's episode is a really important one if you have 3 00:00:09,480 --> 00:00:13,840 Speaker 1: a mortgage, a large mortgage, and you have an investment property. 4 00:00:14,480 --> 00:00:16,720 Speaker 1: There have been some recent changes which you may have 5 00:00:16,760 --> 00:00:20,040 Speaker 1: seen on the news, on the headlines, on social media, 6 00:00:20,120 --> 00:00:24,920 Speaker 1: and it's around afra's new DTI rule. Now, there are 7 00:00:24,960 --> 00:00:27,640 Speaker 1: some important things that you need to know about and 8 00:00:27,880 --> 00:00:30,640 Speaker 1: understand right now so that you know whether you need 9 00:00:30,680 --> 00:00:33,040 Speaker 1: to act on this or not, because if you don't, 10 00:00:33,560 --> 00:00:37,519 Speaker 1: I'm worried that there may be some regret. So to 11 00:00:37,640 --> 00:00:41,520 Speaker 1: help explain all the finer details about what this involves, 12 00:00:42,040 --> 00:00:44,600 Speaker 1: why it's a concern, and what you can actually do 13 00:00:44,680 --> 00:00:47,720 Speaker 1: about it so that doesn't become a concern, we have 14 00:00:48,000 --> 00:00:52,640 Speaker 1: John Mikolzzi from the Blue Lantern Home Loans. Now, for 15 00:00:52,640 --> 00:00:54,920 Speaker 1: anyone that listens to this and thinks, oh my goodness, 16 00:00:54,960 --> 00:00:56,720 Speaker 1: what do I do? Where do I go? Who can 17 00:00:56,760 --> 00:01:00,440 Speaker 1: help me? Of course, John is more than happy help, 18 00:01:00,880 --> 00:01:02,560 Speaker 1: so to make it as easy as possible, I'm just 19 00:01:02,560 --> 00:01:05,680 Speaker 1: gonna pop John's mobile phone number and his email address 20 00:01:05,680 --> 00:01:09,040 Speaker 1: in the podcast notes, so feel free to reach out 21 00:01:09,080 --> 00:01:12,880 Speaker 1: to him when it's appropriate for you. Obviously, sooner rather 22 00:01:12,880 --> 00:01:15,600 Speaker 1: than later, because this is so time sensitive. And please 23 00:01:15,640 --> 00:01:19,679 Speaker 1: know there is absolutely no incentive from me whatsoever should 24 00:01:19,720 --> 00:01:22,800 Speaker 1: you work with John or anyone else from lou landon. 25 00:01:22,840 --> 00:01:25,400 Speaker 1: I'm just happy to put you in contact with someone 26 00:01:25,400 --> 00:01:27,480 Speaker 1: that I have worked with for many many years, I 27 00:01:27,520 --> 00:01:29,880 Speaker 1: know and trust and have used for my own clients, 28 00:01:30,400 --> 00:01:33,759 Speaker 1: family and friends. All right, let's get into this, because 29 00:01:33,800 --> 00:01:52,280 Speaker 1: this is urgent. John, how are you thanking so much 30 00:01:52,280 --> 00:01:54,320 Speaker 1: for jumping on this and I can and helping us 31 00:01:54,400 --> 00:01:57,840 Speaker 1: digest this and understand this in such a time, such 32 00:01:57,840 --> 00:02:00,600 Speaker 1: a prompt manner. I really appreciate it, as all of 33 00:02:00,840 --> 00:02:03,120 Speaker 1: our listeners. How are you. 34 00:02:04,200 --> 00:02:07,080 Speaker 2: I'm really well, Canna, and as usual, thank you for 35 00:02:07,160 --> 00:02:10,560 Speaker 2: the opportunity to discuss what you and I believe is 36 00:02:10,880 --> 00:02:13,760 Speaker 2: what could be quite an important issue for people that 37 00:02:13,800 --> 00:02:14,560 Speaker 2: are affected by. 38 00:02:14,480 --> 00:02:18,560 Speaker 1: The change, and quite serious too as well. So let's 39 00:02:18,560 --> 00:02:21,800 Speaker 1: get straight into it. What exactly is this new rule 40 00:02:22,160 --> 00:02:27,000 Speaker 1: by OPRA, the DTI rule? And why has this been introduced? 41 00:02:27,480 --> 00:02:27,880 Speaker 3: Okay? 42 00:02:27,960 --> 00:02:33,440 Speaker 2: So DTI stands for debt to income ratio, So, as 43 00:02:33,520 --> 00:02:36,840 Speaker 2: the name suggests, the calculation is what are your total 44 00:02:36,880 --> 00:02:40,919 Speaker 2: debts compared to your total income? So, as a really 45 00:02:41,000 --> 00:02:43,680 Speaker 2: simple example, if you're on one hundred thousand dollars gross 46 00:02:43,760 --> 00:02:46,400 Speaker 2: salary and you have a five hundred thousand dollar mortgage, 47 00:02:46,800 --> 00:02:48,120 Speaker 2: your DTI debt. 48 00:02:48,000 --> 00:02:49,400 Speaker 3: To income ratio is five. 49 00:02:50,400 --> 00:02:53,000 Speaker 2: OPRA is bringing a new rule on the first of 50 00:02:53,040 --> 00:02:57,800 Speaker 2: February that states that deposit taking institutions will be capped 51 00:02:58,160 --> 00:03:02,799 Speaker 2: to twenty percent of new loans. Only twenty percent can 52 00:03:02,880 --> 00:03:06,760 Speaker 2: have a DTI of six or more. Okay, so why 53 00:03:06,800 --> 00:03:09,880 Speaker 2: are they doing this. So they've noticed that these high 54 00:03:09,919 --> 00:03:15,280 Speaker 2: DTI loans above six have increased recently, and they then 55 00:03:15,440 --> 00:03:19,400 Speaker 2: jumped to well, that could create weakness and vulnerability in 56 00:03:19,440 --> 00:03:24,120 Speaker 2: the financial sector and in the housing market. So they've 57 00:03:24,200 --> 00:03:27,480 Speaker 2: turned at almost like a preemptive strike. They're they're not 58 00:03:27,480 --> 00:03:30,720 Speaker 2: going to wait until bad things happen. They're putting this 59 00:03:30,800 --> 00:03:33,919 Speaker 2: in now to get ahead of the curve, to try 60 00:03:33,919 --> 00:03:36,280 Speaker 2: and avoid any potential problems down the track. 61 00:03:36,800 --> 00:03:41,600 Speaker 1: So it's a proactive measure, a proactive form of protection 62 00:03:41,760 --> 00:03:42,520 Speaker 1: for our economy. 63 00:03:42,880 --> 00:03:43,760 Speaker 3: Yes, that's right. 64 00:03:44,280 --> 00:03:48,119 Speaker 1: And when you say gross income, is it combined gross income. 65 00:03:48,080 --> 00:03:51,320 Speaker 2: It's combined gross income, it's or it's total income, right, 66 00:03:51,320 --> 00:03:55,280 Speaker 2: So it's total income total debt. So that would include 67 00:03:55,320 --> 00:04:01,280 Speaker 2: rent dividends, any form of income. But importantly it includes 68 00:04:01,640 --> 00:04:05,520 Speaker 2: all debts, not just your mortgage, so it includes credit 69 00:04:05,520 --> 00:04:10,120 Speaker 2: card limits, HEX, debts, personal loans, the whole lot. 70 00:04:11,000 --> 00:04:13,600 Speaker 1: Wow. I bet so many people didn't even know that. No, 71 00:04:14,080 --> 00:04:18,640 Speaker 1: all right, who is most impacted by this rule and 72 00:04:18,680 --> 00:04:21,279 Speaker 1: who you know doesn't need to worry so much? And 73 00:04:21,480 --> 00:04:23,520 Speaker 1: as at this point in time, assuming there are no 74 00:04:23,640 --> 00:04:27,720 Speaker 1: new adjustments to this rule, you know, who's currently sitting safe? 75 00:04:28,279 --> 00:04:28,640 Speaker 3: Okay. 76 00:04:28,680 --> 00:04:31,599 Speaker 2: So the people that are sitting safe are people with 77 00:04:31,680 --> 00:04:35,719 Speaker 2: a DTI less than six. Okay, So if they're well 78 00:04:35,760 --> 00:04:38,960 Speaker 2: below six, no need to worry, no need to panic, 79 00:04:39,600 --> 00:04:41,919 Speaker 2: you know, business as usual. Although as you and I 80 00:04:41,920 --> 00:04:44,400 Speaker 2: have often talked about, that doesn't mean that you just 81 00:04:44,480 --> 00:04:46,719 Speaker 2: sit there and you know, not review your own position. 82 00:04:46,760 --> 00:04:49,240 Speaker 2: Should You should always be reviewing your own position. 83 00:04:49,160 --> 00:04:51,000 Speaker 1: Right, absolutely, on a regular basis. 84 00:04:51,080 --> 00:04:54,400 Speaker 2: Yeah, And with that information they've just shared about, you know, 85 00:04:54,560 --> 00:04:58,280 Speaker 2: debt income ratio includes all your debts. You know, it 86 00:04:58,360 --> 00:05:02,520 Speaker 2: never hurts to understand your DTI try and reduce it, 87 00:05:02,920 --> 00:05:06,280 Speaker 2: you know, get rid of those unnecessary credit cards HEX. 88 00:05:06,440 --> 00:05:08,320 Speaker 2: That is also included, so you know, can you do 89 00:05:08,320 --> 00:05:11,480 Speaker 2: anything about that now with the government's discount et cetera. Right, 90 00:05:12,040 --> 00:05:15,640 Speaker 2: So the people who it could affect is the people 91 00:05:15,720 --> 00:05:18,240 Speaker 2: with a DTI above six, right, So this could be 92 00:05:18,880 --> 00:05:23,000 Speaker 2: people who have decided to take on a big mortgage 93 00:05:23,040 --> 00:05:28,560 Speaker 2: because they want a particular property for themselves, or they're 94 00:05:28,600 --> 00:05:33,040 Speaker 2: aggressively investing in property. So they are the people that 95 00:05:33,400 --> 00:05:37,320 Speaker 2: it could affect. The loans that aren't affected by this 96 00:05:37,400 --> 00:05:41,040 Speaker 2: rule loans for any new construction and bridging loans. 97 00:05:41,800 --> 00:05:44,840 Speaker 1: So does this include people with a home loan, you know, 98 00:05:44,880 --> 00:05:47,120 Speaker 1: a principal place of residence that they're living in. 99 00:05:47,520 --> 00:05:50,800 Speaker 2: Yes, if it's above six, it doesn't matter whether you're owner, 100 00:05:50,800 --> 00:05:52,920 Speaker 2: occupy or investment loan. 101 00:05:53,440 --> 00:05:54,360 Speaker 3: It's a blanket rule. 102 00:05:54,480 --> 00:05:58,000 Speaker 2: And APRA has said they're applying their cap equally to 103 00:05:58,080 --> 00:06:00,720 Speaker 2: owner occupy loans and invest the loan as well, so 104 00:06:00,720 --> 00:06:02,760 Speaker 2: it'll be twenty percent cap owned and occupy loans and 105 00:06:02,960 --> 00:06:05,279 Speaker 2: twenty percent CAP on investment loans. 106 00:06:05,360 --> 00:06:07,479 Speaker 1: What you've got a scenario where you've got to say, 107 00:06:07,560 --> 00:06:10,800 Speaker 1: you know, a couple working and they're planning on going 108 00:06:10,839 --> 00:06:13,040 Speaker 1: down to one income to have a family. I mean 109 00:06:13,240 --> 00:06:16,440 Speaker 1: there DTI might be at the moment, you know, sitting 110 00:06:16,480 --> 00:06:18,880 Speaker 1: around say four, but if with one person stopping work, 111 00:06:18,960 --> 00:06:20,839 Speaker 1: they have a family for a year and take a 112 00:06:20,880 --> 00:06:23,960 Speaker 1: year off, they could easily be tipped into this category. 113 00:06:23,640 --> 00:06:27,479 Speaker 2: Absolutely, So what would have to happen is they'd have 114 00:06:27,520 --> 00:06:30,920 Speaker 2: to go to a lender that one hasn't reached their 115 00:06:30,920 --> 00:06:34,840 Speaker 2: cap yet. And then two, when it comes to maternity leave, 116 00:06:35,160 --> 00:06:38,159 Speaker 2: you have to go to a lender who allows some 117 00:06:38,200 --> 00:06:43,000 Speaker 2: provision to go on with eternity leave, which means that, yeah, 118 00:06:43,000 --> 00:06:45,080 Speaker 2: there's rules around that, but that's probably a topic for 119 00:06:45,080 --> 00:06:45,560 Speaker 2: another day. 120 00:06:45,920 --> 00:06:47,359 Speaker 1: Yeah, I mean this is why you work with a 121 00:06:47,360 --> 00:06:49,680 Speaker 1: mortgage that knows, all right, yes, you're going to fall 122 00:06:49,720 --> 00:06:51,800 Speaker 1: into this category, right, I know that this lender of 123 00:06:51,800 --> 00:06:54,840 Speaker 1: this lender, that lender will potentially be exactly to look 124 00:06:54,839 --> 00:06:59,320 Speaker 1: at your application and consider helping obviously step in and refinancing. 125 00:06:59,680 --> 00:07:01,520 Speaker 1: You know this is right. It's just so important to 126 00:07:01,520 --> 00:07:03,280 Speaker 1: be ahead of the game and understand it. Even if 127 00:07:03,279 --> 00:07:05,640 Speaker 1: it doesn't impact you immediately, it may do further domas 128 00:07:05,640 --> 00:07:08,240 Speaker 1: track particular, if you want someone not necessarily takes time 129 00:07:08,279 --> 00:07:10,720 Speaker 1: out to raise a family, but also someone loses their 130 00:07:10,800 --> 00:07:13,520 Speaker 1: job or decides to take some time off to maybe 131 00:07:13,600 --> 00:07:16,080 Speaker 1: you know, go back to university or whatever it may be. 132 00:07:16,120 --> 00:07:18,840 Speaker 1: I mean, there are going to be lots of different scenarios. 133 00:07:18,280 --> 00:07:22,520 Speaker 2: Absolutely, and what I often say to people is, yes, 134 00:07:22,640 --> 00:07:27,280 Speaker 2: rate is important, but each lender has different policies, right, 135 00:07:27,320 --> 00:07:30,560 Speaker 2: and so if we come back to this topic, importantly, 136 00:07:30,600 --> 00:07:35,280 Speaker 2: the rule only applies to authorized to posit taking institutions, 137 00:07:35,440 --> 00:07:37,520 Speaker 2: I think major banks, anyone that takes it to posit. 138 00:07:39,120 --> 00:07:43,240 Speaker 2: It doesn't apply to lenders who aren't authorized to positive 139 00:07:43,240 --> 00:07:46,360 Speaker 2: taking institutions. So there are lenders that won't be affected 140 00:07:46,360 --> 00:07:49,520 Speaker 2: by this rule, right, So there are options out there. 141 00:07:49,760 --> 00:07:52,360 Speaker 1: Yeah, so it's not a panic doomsday, but it's definitely 142 00:07:52,400 --> 00:07:55,400 Speaker 1: just something that needs, you know, proactive strategic planning with 143 00:07:55,640 --> 00:07:58,680 Speaker 1: professional advice that knows the best way and also the 144 00:07:58,720 --> 00:08:00,280 Speaker 1: cheapest way to make this happen, because a lot of 145 00:08:00,320 --> 00:08:03,240 Speaker 1: people I can see are going to be I guess 146 00:08:03,240 --> 00:08:05,720 Speaker 1: back into a corner where they potentially need to refinance, 147 00:08:05,760 --> 00:08:07,720 Speaker 1: but they may even need to look at refinancing to 148 00:08:07,800 --> 00:08:09,600 Speaker 1: go from say an interest only loan if they've got 149 00:08:09,640 --> 00:08:12,840 Speaker 1: an investment property portfolio, to perhaps principle and interest so 150 00:08:12,880 --> 00:08:17,320 Speaker 1: that they stay within a safe zone with these DTI rules. 151 00:08:18,600 --> 00:08:20,960 Speaker 1: Why do you think this is something you know, the 152 00:08:21,000 --> 00:08:25,800 Speaker 1: people really need to be paying attention to right now. 153 00:08:26,040 --> 00:08:28,040 Speaker 1: And I've got another question to ask you, which you 154 00:08:28,040 --> 00:08:29,800 Speaker 1: may not be a plans for let's just focus on this, 155 00:08:29,880 --> 00:08:32,200 Speaker 1: but like, why is this so important right now? 156 00:08:33,120 --> 00:08:38,440 Speaker 2: It's important right now if you are intending to take 157 00:08:38,480 --> 00:08:41,000 Speaker 2: on new lending, right want if you want to do 158 00:08:41,000 --> 00:08:43,640 Speaker 2: a new lending because and when I mean when I 159 00:08:43,679 --> 00:08:50,880 Speaker 2: say new lending, that includes property purchases, refinances and also 160 00:08:51,720 --> 00:08:54,560 Speaker 2: review an extension of interest only periods. 161 00:08:54,960 --> 00:08:59,320 Speaker 1: Right, So that's a big one. That's a huge one 162 00:08:59,440 --> 00:09:01,200 Speaker 1: listening thing thinking you know, what's fine, I'm not I 163 00:09:01,200 --> 00:09:04,760 Speaker 1: don't intend in buying a new new property, you know, 164 00:09:04,800 --> 00:09:06,160 Speaker 1: in the next couple of years, so we don't need 165 00:09:06,160 --> 00:09:09,559 Speaker 1: to worry. But if you are on you know, you 166 00:09:09,720 --> 00:09:13,480 Speaker 1: say an interest only term and your term is due 167 00:09:13,480 --> 00:09:16,400 Speaker 1: to expire. For example, Tom and I have an interest 168 00:09:16,440 --> 00:09:19,240 Speaker 1: only loan on an investment property, which actually I just 169 00:09:19,320 --> 00:09:23,760 Speaker 1: checked the other day it expires in April. So we 170 00:09:23,840 --> 00:09:26,200 Speaker 1: need to, you know, get some advice from you guys 171 00:09:26,240 --> 00:09:27,920 Speaker 1: as to what to do and you know, whether we 172 00:09:27,920 --> 00:09:31,439 Speaker 1: should look at changing a loan structure or looking at 173 00:09:31,480 --> 00:09:33,680 Speaker 1: an extension or whatever, all the differ options that might 174 00:09:33,760 --> 00:09:35,520 Speaker 1: might be able to come to us. So that's a 175 00:09:35,679 --> 00:09:37,840 Speaker 1: huge one. I mean, everyone who's listening to this right now, 176 00:09:38,400 --> 00:09:41,400 Speaker 1: jump on your internet banking and have a look at 177 00:09:41,400 --> 00:09:44,920 Speaker 1: your loan terms and check out that when your your 178 00:09:45,040 --> 00:09:48,240 Speaker 1: terms actually end, like when they expire, and you know, 179 00:09:48,360 --> 00:09:50,760 Speaker 1: is this something as simple as contacting the banks today 180 00:09:50,800 --> 00:09:53,640 Speaker 1: and saying can I renew my interest only term? Or 181 00:09:53,640 --> 00:09:56,080 Speaker 1: do they have to get a mortgage broker or their 182 00:09:56,120 --> 00:09:58,760 Speaker 1: bank to step in and look at a new application. 183 00:09:58,800 --> 00:10:02,959 Speaker 2: Almost here's the thing, and this is a lot of 184 00:10:02,960 --> 00:10:07,080 Speaker 2: people get caught out by this because I proactively have 185 00:10:07,160 --> 00:10:11,080 Speaker 2: it marked when clients interest only periods are ending, and 186 00:10:11,120 --> 00:10:15,680 Speaker 2: I reach out, say three months before, and then if 187 00:10:16,200 --> 00:10:19,360 Speaker 2: the client wants to extend their interest only period, it's 188 00:10:19,360 --> 00:10:23,040 Speaker 2: effectively an application. The bank reassesses your position. So it 189 00:10:23,160 --> 00:10:26,920 Speaker 2: is the same information and process as if you were 190 00:10:26,920 --> 00:10:30,760 Speaker 2: refinancing or getting a loan for a new property. 191 00:10:30,880 --> 00:10:31,120 Speaker 3: Right. 192 00:10:31,160 --> 00:10:33,320 Speaker 2: And the reason is this The people hate people just 193 00:10:33,520 --> 00:10:37,840 Speaker 2: hate that, right, But again it's the reason is quite 194 00:10:38,000 --> 00:10:41,960 Speaker 2: logical in that the bank is assessing whether you can 195 00:10:42,160 --> 00:10:46,120 Speaker 2: afford again an interest only period because extending your interest 196 00:10:46,160 --> 00:10:49,520 Speaker 2: only period actually increases your total interest bill, and so 197 00:10:49,760 --> 00:10:52,560 Speaker 2: the bank has to assess whether you can afford that. 198 00:10:52,760 --> 00:10:55,680 Speaker 2: So it's yes, people don't like it, but it is 199 00:10:55,720 --> 00:10:59,400 Speaker 2: a necessary evil and it's there for the protection of people, right, 200 00:10:59,480 --> 00:11:03,080 Speaker 2: So it is reassessment, right, That's just something that's that's unavoidable. 201 00:11:03,120 --> 00:11:04,600 Speaker 2: You just can't call up the back and go, hey, 202 00:11:04,600 --> 00:11:06,040 Speaker 2: I want to extend my interest on the period. 203 00:11:06,080 --> 00:11:07,120 Speaker 3: It just doesn't work like that. 204 00:11:07,559 --> 00:11:09,720 Speaker 1: But it'd be in your interest to look at doing 205 00:11:09,720 --> 00:11:11,840 Speaker 1: this before the first of February, I. 206 00:11:11,679 --> 00:11:15,000 Speaker 2: Imagine absolutely, And I would go, like your example, I 207 00:11:15,040 --> 00:11:18,360 Speaker 2: would even go to if your interest only period day 208 00:11:18,960 --> 00:11:22,640 Speaker 2: is expiring, say within twelve months, then if you wanted 209 00:11:22,679 --> 00:11:25,079 Speaker 2: to extend it, I would look at it now. Because 210 00:11:25,080 --> 00:11:28,520 Speaker 2: the other thing is, yeah, there's rate creep, right, so 211 00:11:29,280 --> 00:11:32,680 Speaker 2: you know there's probably better rates available anyway at the moment, 212 00:11:33,000 --> 00:11:34,680 Speaker 2: so it's probably a good time. 213 00:11:34,600 --> 00:11:35,079 Speaker 3: To look at it. 214 00:11:35,320 --> 00:11:37,800 Speaker 2: The other critical piece here is that if you can't 215 00:11:37,960 --> 00:11:41,480 Speaker 2: or don't want to extend your interest only period, naturally 216 00:11:41,640 --> 00:11:45,600 Speaker 2: your repayments role to principle and interest repayments automatically on. 217 00:11:45,640 --> 00:11:49,439 Speaker 1: That which is a significant increase. Like the other night 218 00:11:49,559 --> 00:11:51,600 Speaker 1: when you know it was Monday night this was released 219 00:11:51,720 --> 00:11:54,560 Speaker 1: or Monday day at dinner time, Tom and I quickly 220 00:11:54,600 --> 00:11:56,800 Speaker 1: looked at the numbers. Is to switch alone for this 221 00:11:56,920 --> 00:11:59,400 Speaker 1: investment property from interest only to principal and interest and 222 00:11:59,480 --> 00:12:04,040 Speaker 1: it was significant increase in our cash flow, you know, 223 00:12:04,160 --> 00:12:07,040 Speaker 1: and I was quite I mean, I think people really 224 00:12:07,080 --> 00:12:09,040 Speaker 1: need to look at these numbers to understand are they 225 00:12:09,080 --> 00:12:11,120 Speaker 1: prepared if they don't do their paperwork now and get 226 00:12:11,160 --> 00:12:12,920 Speaker 1: on the phone and the front foot with the bank 227 00:12:13,040 --> 00:12:15,679 Speaker 1: or the mortgage broker to understand what the consequences of 228 00:12:16,240 --> 00:12:19,800 Speaker 1: having to spitch to a you know, principal and interest loan. 229 00:12:20,280 --> 00:12:22,520 Speaker 1: You know what it really looks like. So I mean, 230 00:12:22,679 --> 00:12:25,720 Speaker 1: I can't stress enough to everyone listening to please check 231 00:12:26,200 --> 00:12:30,040 Speaker 1: your loan conditions and the finer details. 232 00:12:30,880 --> 00:12:33,720 Speaker 2: The next point here is that you need to also 233 00:12:33,840 --> 00:12:36,360 Speaker 2: understand what your it's called a role to rate, So 234 00:12:36,520 --> 00:12:39,479 Speaker 2: what will be your role to principal. 235 00:12:39,120 --> 00:12:39,719 Speaker 3: And interest rate? 236 00:12:40,480 --> 00:12:43,400 Speaker 2: And again, if you're let's just say, had a five 237 00:12:43,520 --> 00:12:46,079 Speaker 2: year interest only period, that loan was done five years ago, 238 00:12:46,600 --> 00:12:50,360 Speaker 2: and in your loan contract, your role to principal interest 239 00:12:50,880 --> 00:12:55,000 Speaker 2: rate that was negotiated five years ago just maybe totally 240 00:12:55,040 --> 00:12:56,880 Speaker 2: out of the market. So it actually can be a 241 00:12:56,920 --> 00:12:59,360 Speaker 2: double hit. Not only will you potentially not only will 242 00:12:59,360 --> 00:13:01,920 Speaker 2: you go to principal interest repayments, but then you may 243 00:13:02,040 --> 00:13:05,319 Speaker 2: go to a rate that is way out of the market, 244 00:13:05,679 --> 00:13:08,320 Speaker 2: so it's a double hit on cash flow and that then. 245 00:13:08,320 --> 00:13:12,920 Speaker 1: Means refinancing to a whole another lender. Yes, yeah, Okay, 246 00:13:13,320 --> 00:13:14,640 Speaker 1: Now the question I wanted to ask you, and I 247 00:13:14,679 --> 00:13:16,160 Speaker 1: appreciate that you may not be able to answer this, 248 00:13:16,240 --> 00:13:18,079 Speaker 1: but I'm going to ask you anyway. You know this 249 00:13:18,320 --> 00:13:22,880 Speaker 1: new limit of twenty percent for the banks, let's call it, 250 00:13:23,800 --> 00:13:25,800 Speaker 1: what do you think it currently is? Do you think 251 00:13:25,880 --> 00:13:28,559 Speaker 1: it is you know, for APPRA to have to come 252 00:13:28,640 --> 00:13:31,480 Speaker 1: forward and say right there, this new cap of twenty percent, 253 00:13:31,760 --> 00:13:34,640 Speaker 1: Do you think it's significantly high at than twenty percent 254 00:13:34,679 --> 00:13:36,920 Speaker 1: at the moment? No? Are there only a lot of 255 00:13:37,000 --> 00:13:41,280 Speaker 1: people involved in this, like the fall into this scary pole. 256 00:13:41,880 --> 00:13:43,839 Speaker 2: So what they've said, what APRA has said is that 257 00:13:44,400 --> 00:13:49,480 Speaker 2: they've noticed a significant increase all be it coming off 258 00:13:49,520 --> 00:13:52,120 Speaker 2: at low base right. They haven't put the numbers around 259 00:13:52,160 --> 00:13:55,719 Speaker 2: what significant increase means, but where it's come from and 260 00:13:55,760 --> 00:13:59,199 Speaker 2: where it's going to two separate things. Regardless of where 261 00:13:59,320 --> 00:14:02,040 Speaker 2: the banks have been that it's from first to February 262 00:14:02,280 --> 00:14:05,880 Speaker 2: or new loans. New loans don't have this cap right, 263 00:14:06,200 --> 00:14:09,760 Speaker 2: sort of what's happened in the past. It doesn't really 264 00:14:09,800 --> 00:14:13,959 Speaker 2: have a bearing if bank a come twenty eighth of February, 265 00:14:14,360 --> 00:14:18,600 Speaker 2: twenty percent of their new loans are above six DTI. 266 00:14:19,080 --> 00:14:20,120 Speaker 3: That's it, the reach of the cap. 267 00:14:20,360 --> 00:14:22,880 Speaker 1: How does this then impact you know, first homeowners. 268 00:14:23,280 --> 00:14:28,000 Speaker 2: Look, the rule applies regardless of the type of borrowers. 269 00:14:28,960 --> 00:14:32,120 Speaker 2: It's more that the carve outs and exclusions are type 270 00:14:32,120 --> 00:14:35,080 Speaker 2: of loan. Like I said, it doesn't apply to bridging loans, 271 00:14:35,200 --> 00:14:40,440 Speaker 2: doesn't apply to any new construction. Okay, so it can 272 00:14:40,520 --> 00:14:46,240 Speaker 2: affect any borrower. Now, first home buyers usually their loan 273 00:14:46,320 --> 00:14:52,080 Speaker 2: amounts are generally lower and their DTIs are generally under six. 274 00:14:52,440 --> 00:14:55,520 Speaker 2: But again, you know, you could get a scenario of 275 00:14:56,400 --> 00:14:59,200 Speaker 2: you know, a couple who want to buy their first property, 276 00:14:59,520 --> 00:15:02,520 Speaker 2: the real keen to get into the market, and you 277 00:15:02,560 --> 00:15:05,600 Speaker 2: know they want to push above six. Well you know 278 00:15:05,760 --> 00:15:08,760 Speaker 2: that they potentially get included, you know, in the app 279 00:15:08,800 --> 00:15:09,120 Speaker 2: as well. 280 00:15:09,280 --> 00:15:11,760 Speaker 1: All right, okay, so everyone listening right now? What do 281 00:15:11,840 --> 00:15:14,120 Speaker 1: they need to do where? Exactly what do they need 282 00:15:14,200 --> 00:15:16,960 Speaker 1: to be checking as they open up their internet banking? 283 00:15:17,200 --> 00:15:19,480 Speaker 1: Can you talk us through the key things here? 284 00:15:20,040 --> 00:15:22,240 Speaker 3: Okay, So I'll split it into two. 285 00:15:22,440 --> 00:15:25,800 Speaker 2: If you've got a pre approval and you haven't bought 286 00:15:25,800 --> 00:15:28,680 Speaker 2: a property yet, and that pre approval is set to 287 00:15:28,840 --> 00:15:32,960 Speaker 2: expire after the first of February. You may want to 288 00:15:33,040 --> 00:15:35,280 Speaker 2: check well before that that if you have to extend 289 00:15:35,320 --> 00:15:40,680 Speaker 2: that pre approval, that your borrowing capacity won't be potentially 290 00:15:40,720 --> 00:15:44,560 Speaker 2: affected by this new rule. Right, because if you don't 291 00:15:44,560 --> 00:15:47,440 Speaker 2: find a property then you try and negotiate a property 292 00:15:47,480 --> 00:15:50,720 Speaker 2: after the first of February, you need to understand whether 293 00:15:50,800 --> 00:15:52,960 Speaker 2: you can still go in at the loan amount that 294 00:15:53,000 --> 00:15:55,720 Speaker 2: you were negotiating at before because if you can't, well, 295 00:15:55,760 --> 00:15:59,240 Speaker 2: then you have to reset your expectations. Okay, So that's critical, right. 296 00:15:59,880 --> 00:16:04,200 Speaker 2: So that's for purchases of property right with existing loans. 297 00:16:04,480 --> 00:16:07,000 Speaker 2: You need to understand are you potentially caught by this 298 00:16:07,200 --> 00:16:10,160 Speaker 2: rule then if you're going to do any form of 299 00:16:10,240 --> 00:16:13,000 Speaker 2: new lending right on your existing loan. So it could 300 00:16:13,320 --> 00:16:15,480 Speaker 2: that's including a refinance, it could be an upgrade, it 301 00:16:15,520 --> 00:16:18,240 Speaker 2: could be renovations. 302 00:16:18,400 --> 00:16:19,760 Speaker 1: They're recycling. If you look at. 303 00:16:19,760 --> 00:16:23,880 Speaker 3: Recycling anything anything, right, you need to check. You need 304 00:16:23,920 --> 00:16:24,320 Speaker 3: to act now. 305 00:16:24,600 --> 00:16:25,920 Speaker 2: If you want to do any new lending and you 306 00:16:26,000 --> 00:16:28,360 Speaker 2: think you may be affected by this rule, you need 307 00:16:28,400 --> 00:16:28,880 Speaker 2: to act now. 308 00:16:29,000 --> 00:16:31,000 Speaker 3: So manage your loans by yourself. 309 00:16:31,080 --> 00:16:33,120 Speaker 2: You may need to take a day off and not 310 00:16:33,280 --> 00:16:36,760 Speaker 2: go to the beach the stummer and check things or 311 00:16:37,320 --> 00:16:38,240 Speaker 2: give it to me and I'll do. 312 00:16:38,280 --> 00:16:40,240 Speaker 3: It whilst you're at the beach. So really, people's the 313 00:16:40,320 --> 00:16:40,920 Speaker 3: choice is yours. 314 00:16:41,240 --> 00:16:44,240 Speaker 1: And there's just several that knows there's no there's no charge, 315 00:16:44,240 --> 00:16:46,080 Speaker 1: there's no fee, there's no You're not going to get 316 00:16:46,120 --> 00:16:48,680 Speaker 1: a bill, you know, for John's time here. It's John 317 00:16:48,800 --> 00:16:51,840 Speaker 1: is remunerated by the bank, so you don't need to 318 00:16:51,840 --> 00:16:53,960 Speaker 1: worry about that. You're literally doing all the heavy lifting 319 00:16:55,120 --> 00:16:58,440 Speaker 1: life admin, you know, for your clients. All right, so 320 00:16:58,520 --> 00:16:59,960 Speaker 1: what else do we need to be doing here, because 321 00:16:59,960 --> 00:17:01,840 Speaker 1: I mean even I'm panicking about this. 322 00:17:03,120 --> 00:17:07,480 Speaker 2: Well, well, then the first thing is don't panic again, 323 00:17:07,560 --> 00:17:12,000 Speaker 2: have a general understanding of your DTI. But also again, 324 00:17:12,480 --> 00:17:15,760 Speaker 2: you know people usually leave. I get a lot of people, 325 00:17:16,320 --> 00:17:20,159 Speaker 2: you know, come January February New Year. You know they 326 00:17:20,200 --> 00:17:22,400 Speaker 2: want to they want to look at their situation again. Well, 327 00:17:22,720 --> 00:17:25,680 Speaker 2: bring it forward and and again. Even if you know 328 00:17:25,840 --> 00:17:28,600 Speaker 2: in your head your rough calculation, your DTI is is 329 00:17:28,680 --> 00:17:31,680 Speaker 2: well under six, doesn't matter. You look at what the 330 00:17:32,080 --> 00:17:33,840 Speaker 2: look at what the calculation is saying, and look at 331 00:17:33,880 --> 00:17:34,600 Speaker 2: what APPA is saying. 332 00:17:34,880 --> 00:17:35,000 Speaker 1: Right. 333 00:17:35,240 --> 00:17:37,200 Speaker 2: One of the other reasons they are doing this is 334 00:17:37,280 --> 00:17:41,200 Speaker 2: because you know, they're always concerned about the high indebtedness 335 00:17:41,280 --> 00:17:42,280 Speaker 2: of Australian households. 336 00:17:42,560 --> 00:17:45,080 Speaker 3: So do a sense check, a health check on. 337 00:17:45,200 --> 00:17:48,280 Speaker 2: Your debts now again, you know, my big bugbear is 338 00:17:48,400 --> 00:17:51,959 Speaker 2: people who have five credit cards that don't use them 339 00:17:52,240 --> 00:17:55,160 Speaker 2: and they've got these credit card limits that are unnecessary. 340 00:17:55,320 --> 00:17:57,439 Speaker 2: Close some bring it down, you know, chop them up, 341 00:17:58,280 --> 00:18:01,480 Speaker 2: things like hex hex is include it in the debt calculation. 342 00:18:02,200 --> 00:18:03,800 Speaker 3: Is it time to pay it? 343 00:18:03,920 --> 00:18:05,720 Speaker 2: You know now that the government has given you the 344 00:18:05,760 --> 00:18:09,399 Speaker 2: twenty percent discount, right, or there are lenders who actually 345 00:18:09,400 --> 00:18:10,760 Speaker 2: if you are going to pay your heck, if your 346 00:18:10,800 --> 00:18:13,320 Speaker 2: hex is going to pay itself naturally within the next year, 347 00:18:13,640 --> 00:18:16,320 Speaker 2: they're actually whine included in your DTI calculation and in 348 00:18:16,320 --> 00:18:17,200 Speaker 2: your buyering capacity. 349 00:18:17,440 --> 00:18:17,560 Speaker 1: Right. 350 00:18:17,800 --> 00:18:19,840 Speaker 3: So these are all the things that you need to 351 00:18:19,920 --> 00:18:21,880 Speaker 3: check regardless of this rule. Right. 352 00:18:22,119 --> 00:18:24,880 Speaker 2: But importantly, if you believe you are affected by this rule, 353 00:18:24,960 --> 00:18:26,800 Speaker 2: and I can help calculate that, and if you want 354 00:18:26,840 --> 00:18:28,479 Speaker 2: to do something, act now. 355 00:18:28,880 --> 00:18:31,320 Speaker 1: And on that note of acting now, I mean I 356 00:18:31,440 --> 00:18:33,359 Speaker 1: was chatting with Adam the other day and you know, 357 00:18:33,480 --> 00:18:35,520 Speaker 1: he was explaining to me that there is such a 358 00:18:35,640 --> 00:18:40,840 Speaker 1: huge backlog with these banks processing applications. You know, obviously 359 00:18:40,920 --> 00:18:43,440 Speaker 1: there's an influx of people looking to get into the 360 00:18:43,480 --> 00:18:47,040 Speaker 1: property market. You know, the it's taking a long time 361 00:18:47,119 --> 00:18:50,280 Speaker 1: to get loans approved and to get them finalized, you know, 362 00:18:50,600 --> 00:18:53,360 Speaker 1: not just new loans, even refinancing, even setting up debt 363 00:18:53,359 --> 00:18:56,920 Speaker 1: recycling strategies. You know, you cannot expect to just turn 364 00:18:57,040 --> 00:18:59,160 Speaker 1: up and see a mortgage work or see your bank 365 00:18:59,200 --> 00:19:01,760 Speaker 1: and expect the whole to be fixed within forty eight hours. 366 00:19:02,240 --> 00:19:05,640 Speaker 1: You know, this is it is a lengthy process. Obviously, 367 00:19:05,720 --> 00:19:08,160 Speaker 1: you guys do all of the hard work, but it's 368 00:19:08,240 --> 00:19:11,000 Speaker 1: not something people can expect to have fixed overnight. Which 369 00:19:11,040 --> 00:19:15,800 Speaker 1: is why, particularly with this backlog and the extensions and 370 00:19:15,960 --> 00:19:19,159 Speaker 1: the delays, you need to get onto this. Literally the 371 00:19:19,240 --> 00:19:21,439 Speaker 1: moment this podcast ends, you need to be picking up 372 00:19:21,480 --> 00:19:24,879 Speaker 1: the phone asking the questions to checking the expiry dates 373 00:19:24,960 --> 00:19:25,720 Speaker 1: on those loans. 374 00:19:26,040 --> 00:19:26,240 Speaker 3: Yeah. 375 00:19:26,440 --> 00:19:29,920 Speaker 2: Look, it's a great point and it's it's self fulfilling really, 376 00:19:30,119 --> 00:19:33,600 Speaker 2: meaning that if you are if your DTI is above six, 377 00:19:34,080 --> 00:19:37,920 Speaker 2: general rule is your scenario is probably not standard. There's 378 00:19:37,960 --> 00:19:41,600 Speaker 2: probably some complexity in there, and that's where the backlog 379 00:19:41,680 --> 00:19:45,240 Speaker 2: comes in. Is that the higher the complexity, you know, 380 00:19:45,440 --> 00:19:49,159 Speaker 2: some lenders, Yeah, they may look at it in two 381 00:19:49,359 --> 00:19:53,760 Speaker 2: three days a week. But then they may have more questions. 382 00:19:54,359 --> 00:19:56,840 Speaker 2: And if your DTI is above six, I'll guarantee you 383 00:19:56,920 --> 00:19:57,879 Speaker 2: they'll have more questions. 384 00:19:58,320 --> 00:19:58,560 Speaker 3: Okay. 385 00:19:59,000 --> 00:20:02,760 Speaker 2: And so it's that circular process of assessment which creates 386 00:20:03,240 --> 00:20:05,960 Speaker 2: the backlog and length of time. And it's something that 387 00:20:06,720 --> 00:20:08,680 Speaker 2: you know, we work as you know, we work. We 388 00:20:08,840 --> 00:20:11,920 Speaker 2: work pretty quickly. Right, We're not the problem. We're not 389 00:20:11,960 --> 00:20:15,280 Speaker 2: the issue. The issue is sometimes the lenders with their process, 390 00:20:15,359 --> 00:20:18,679 Speaker 2: especially of a Christmas they're not as quick as they 391 00:20:18,760 --> 00:20:19,760 Speaker 2: perhaps caught or should. 392 00:20:19,800 --> 00:20:23,080 Speaker 1: But yeah, and it's a very important point that you raise. 393 00:20:23,119 --> 00:20:25,159 Speaker 1: You know, if you do have a DT I have 394 00:20:25,280 --> 00:20:28,840 Speaker 1: six or higher, your situation is most likely complex. There's 395 00:20:28,840 --> 00:20:30,960 Speaker 1: a bit of a backstory as to you know, you 396 00:20:31,040 --> 00:20:33,520 Speaker 1: know what you're doing, your goals, your strategy, you know 397 00:20:33,800 --> 00:20:36,120 Speaker 1: the way that you're you know, perhaps you're self employed. 398 00:20:36,800 --> 00:20:39,639 Speaker 1: There are lots of parts to your financial story. And 399 00:20:39,720 --> 00:20:44,280 Speaker 1: this is why having an experienced mortgage broker like yourself, 400 00:20:44,520 --> 00:20:46,960 Speaker 1: like Joe, like Adam from Blue Land, and it goes 401 00:20:47,040 --> 00:20:50,080 Speaker 1: in for you on your behalf and explains you know, 402 00:20:50,359 --> 00:20:53,080 Speaker 1: this is Peter Peter. You know, he runs his own business. 403 00:20:53,119 --> 00:20:55,480 Speaker 1: He's got ten employees. You know he's got a business 404 00:20:55,520 --> 00:20:58,639 Speaker 1: loan here, but he's got an investment property portfolio here 405 00:20:58,720 --> 00:21:01,280 Speaker 1: and a debt recycling strategy on a family home. You 406 00:21:01,480 --> 00:21:03,320 Speaker 1: go in and do this so that it's not a 407 00:21:03,400 --> 00:21:06,480 Speaker 1: matter of you know, computer says no, you know you've 408 00:21:06,520 --> 00:21:08,440 Speaker 1: been declined or you've been knocked back, or yes, you 409 00:21:08,560 --> 00:21:11,359 Speaker 1: have to switch to principle and interest. Now you've got 410 00:21:11,480 --> 00:21:14,040 Speaker 1: someone that actually you can have a human conversation with. 411 00:21:14,560 --> 00:21:17,320 Speaker 1: They can go in and then talk to someone at 412 00:21:17,560 --> 00:21:20,440 Speaker 1: your bank, on your behalf that can have this important 413 00:21:20,480 --> 00:21:23,200 Speaker 1: conversation so that you can then figure out what is 414 00:21:23,280 --> 00:21:27,280 Speaker 1: the best course of action, you know, obviously for your 415 00:21:27,480 --> 00:21:30,119 Speaker 1: your clients and obviously the person at heart here. So 416 00:21:30,800 --> 00:21:32,680 Speaker 1: you know, I can't stress be just the power of 417 00:21:32,760 --> 00:21:38,040 Speaker 1: having experienced mortgage broker if your situation is even remotely complicated. 418 00:21:38,320 --> 00:21:40,440 Speaker 1: Now all right, you know, John, thank you so much. 419 00:21:40,440 --> 00:21:43,320 Speaker 1: I mean, I even myself, I feel so much more relaxed, 420 00:21:43,480 --> 00:21:46,040 Speaker 1: even though I am obviously concerned, and I've already I've 421 00:21:46,040 --> 00:21:47,719 Speaker 1: already made that phone call to Adam to get him 422 00:21:47,760 --> 00:21:49,960 Speaker 1: to check, you know, our situation, to make sure we're 423 00:21:49,960 --> 00:21:52,120 Speaker 1: okay and if we do need to make a change, 424 00:21:52,119 --> 00:21:54,200 Speaker 1: which I suspect we will that we do it, you know, 425 00:21:54,320 --> 00:21:58,040 Speaker 1: in advance, but someone like yourself, can you explain to 426 00:21:58,080 --> 00:22:02,560 Speaker 1: the listeners, you know, how how the process involved, how 427 00:22:02,640 --> 00:22:04,320 Speaker 1: you can help and what you'll be looking out for 428 00:22:04,760 --> 00:22:08,160 Speaker 1: and how you know, other people can really navigate these 429 00:22:08,240 --> 00:22:11,720 Speaker 1: new rules. Because my concern is that this is you know, 430 00:22:11,960 --> 00:22:14,000 Speaker 1: this feels like it's come out of the blue, but 431 00:22:14,280 --> 00:22:16,920 Speaker 1: is this going to get worse? Are they going to 432 00:22:16,960 --> 00:22:18,200 Speaker 1: get stricter? Potentially? 433 00:22:18,400 --> 00:22:22,280 Speaker 2: Okay, So when it comes I'll answer the navigation part 434 00:22:22,600 --> 00:22:27,080 Speaker 2: and how the process works, so navigating it, and so 435 00:22:27,200 --> 00:22:31,000 Speaker 2: the process with me is you know, initial conversation, understanding 436 00:22:31,080 --> 00:22:34,680 Speaker 2: of the understanding of the scenario. Then you know, if 437 00:22:34,720 --> 00:22:38,120 Speaker 2: we need to go to assessment, then providing the required 438 00:22:38,800 --> 00:22:43,040 Speaker 2: documents and information to allow me to do the assessment. 439 00:22:43,240 --> 00:22:46,680 Speaker 2: And again you know, it's pretty efficient these days. We 440 00:22:46,760 --> 00:22:49,680 Speaker 2: have we have individual portals for people. They just upload information. 441 00:22:50,280 --> 00:22:52,919 Speaker 2: It's not as big an impact on your life admin 442 00:22:52,960 --> 00:22:56,840 Speaker 2: as people think, right, because then and then the work 443 00:22:56,960 --> 00:22:58,480 Speaker 2: is with me. Then I go away and you know, 444 00:22:58,600 --> 00:23:02,159 Speaker 2: crunch crunch the numbers and then can guide people as 445 00:23:02,200 --> 00:23:04,720 Speaker 2: to strategies, options, you know, et cetera. 446 00:23:05,040 --> 00:23:09,920 Speaker 3: Okay, So so that's that's how you know that that 447 00:23:10,080 --> 00:23:11,720 Speaker 3: navigation you know it works? 448 00:23:12,040 --> 00:23:12,159 Speaker 1: Right? 449 00:23:13,160 --> 00:23:15,000 Speaker 3: Sorry? What was the second part of the question, how do. 450 00:23:15,000 --> 00:23:17,920 Speaker 1: You help you? When that was? I think it was 451 00:23:17,960 --> 00:23:18,840 Speaker 1: something like do you see. 452 00:23:18,720 --> 00:23:22,480 Speaker 3: This getting do we see getting worse? Yes? Do getting worse? Okay, 453 00:23:23,040 --> 00:23:23,679 Speaker 3: it's great, I'll. 454 00:23:23,600 --> 00:23:25,240 Speaker 1: Just say this. You could say, maybe to start with, 455 00:23:25,800 --> 00:23:28,119 Speaker 1: to answer your question, do I see this potentially getting 456 00:23:28,240 --> 00:23:30,800 Speaker 1: worse because it has come out of the blue? You know, 457 00:23:31,119 --> 00:23:32,280 Speaker 1: something like that, Okay, to. 458 00:23:32,320 --> 00:23:35,320 Speaker 2: Answer your question around you know, could this get worse? Well, 459 00:23:37,160 --> 00:23:38,879 Speaker 2: the answer is yes, So this this came out of 460 00:23:38,920 --> 00:23:43,520 Speaker 2: the blue, right, no one. You know, if you'd ask 461 00:23:43,600 --> 00:23:47,639 Speaker 2: me at the start of the year you know what 462 00:23:47,880 --> 00:23:49,720 Speaker 2: new things could possibly come in? I would not have 463 00:23:49,800 --> 00:23:53,439 Speaker 2: picked this one, okay. And it will be the numbers. 464 00:23:53,600 --> 00:23:58,400 Speaker 2: If that cap gets reached quickly, then appraa may get 465 00:23:58,480 --> 00:23:59,040 Speaker 2: even tighter. 466 00:23:59,359 --> 00:23:59,520 Speaker 3: Right. 467 00:23:59,800 --> 00:24:04,600 Speaker 2: And also if they're seeing that that high indebtedness you know, 468 00:24:04,760 --> 00:24:08,800 Speaker 2: still there. And then importantly rates aren't going to drop 469 00:24:08,960 --> 00:24:11,960 Speaker 2: because that now I've heard one bank with their forecart 470 00:24:12,000 --> 00:24:15,160 Speaker 2: saying that they flipped from potential rate cut next year 471 00:24:15,240 --> 00:24:19,840 Speaker 2: to perhaps the rate increase in November. Right, so there's 472 00:24:19,880 --> 00:24:23,479 Speaker 2: no rate cuts. That's going to help people. And this continues, well, 473 00:24:23,520 --> 00:24:27,040 Speaker 2: then APRO you know, APRA could act again. It could 474 00:24:27,040 --> 00:24:29,800 Speaker 2: be you know another rule, particularly if. 475 00:24:29,720 --> 00:24:32,440 Speaker 1: We have interest rate rises and we start to see 476 00:24:32,600 --> 00:24:36,639 Speaker 1: more mortgage stress, you know, kick off and it is 477 00:24:36,920 --> 00:24:39,600 Speaker 1: you know, it can have a domino effect, the flow 478 00:24:39,640 --> 00:24:43,400 Speaker 1: on effect. You know, this could be really I don't 479 00:24:43,400 --> 00:24:46,440 Speaker 1: want to be doomsday and negative, but for a Monday 480 00:24:46,480 --> 00:24:50,200 Speaker 1: morning that there is so much danger with this, you know, 481 00:24:52,040 --> 00:24:54,680 Speaker 1: the potential trend of where this could could keep going. 482 00:24:55,520 --> 00:24:56,200 Speaker 3: Yeah, that's right. 483 00:24:56,440 --> 00:25:00,800 Speaker 2: So what I would speculate what APRA scene is that 484 00:25:01,200 --> 00:25:04,640 Speaker 2: people have re entered the buying market with these infrastrate 485 00:25:04,720 --> 00:25:07,439 Speaker 2: cuts that we've had this year, right, and so then 486 00:25:08,760 --> 00:25:12,200 Speaker 2: people have been emboldened and are bullish and listening to 487 00:25:12,240 --> 00:25:14,639 Speaker 2: the commentary around all there could be even more rate cuts, right. 488 00:25:14,800 --> 00:25:18,640 Speaker 2: So therefore that's why they have gone for these high 489 00:25:18,800 --> 00:25:21,280 Speaker 2: DT eyed loans because they're thinking, okay, well rates will 490 00:25:21,280 --> 00:25:25,920 Speaker 2: continue dropping, I'll be fine, right. I think APRA has gone, okay, 491 00:25:26,000 --> 00:25:28,440 Speaker 2: well we're going to do something here just in case 492 00:25:28,600 --> 00:25:33,840 Speaker 2: rates don't drop, right and people's expectations are incorrect, and 493 00:25:33,880 --> 00:25:36,959 Speaker 2: then they're stuck with these high DT eyed loans, right, 494 00:25:37,160 --> 00:25:40,160 Speaker 2: so I would speculate that's probably the thinking that's gone 495 00:25:40,200 --> 00:25:42,880 Speaker 2: into this from opera, because it's pretty quick that they've 496 00:25:42,960 --> 00:25:44,640 Speaker 2: come and it came out of the blue. 497 00:25:45,200 --> 00:25:50,159 Speaker 1: Yeah, it's it's a very firm figure like it's you know, 498 00:25:50,480 --> 00:25:54,600 Speaker 1: only a maximum of twenty percent across the major banks. 499 00:25:54,720 --> 00:25:56,439 Speaker 1: You know, it's not a huge amount of people. They 500 00:25:56,440 --> 00:25:58,560 Speaker 1: are going to be allowed to stay and it's allowed 501 00:25:58,560 --> 00:26:01,240 Speaker 1: to have a detail of six more. John, thank you 502 00:26:01,520 --> 00:26:06,360 Speaker 1: so much for sharing everything with us, helping break this down, 503 00:26:06,480 --> 00:26:10,240 Speaker 1: helping calm my nerves, but also way more importantly, making 504 00:26:10,440 --> 00:26:12,640 Speaker 1: our listeners aware of this so that they don't get 505 00:26:12,720 --> 00:26:16,200 Speaker 1: a rude shock, they don't get placed in a position 506 00:26:16,240 --> 00:26:18,399 Speaker 1: where they have to switch their loans to principal and interest, 507 00:26:18,480 --> 00:26:19,720 Speaker 1: or they are in a position where they have to 508 00:26:19,760 --> 00:26:23,320 Speaker 1: potentially sell and you know, undo their hard work before 509 00:26:23,320 --> 00:26:27,200 Speaker 1: it's even worked for them. So anyone listening promised me 510 00:26:27,560 --> 00:26:30,040 Speaker 1: the moment this podcast ends, which isn't about one minute, 511 00:26:30,480 --> 00:26:33,720 Speaker 1: you are jumping onto your internet banking and then once 512 00:26:33,760 --> 00:26:37,119 Speaker 1: you've worked out your total debt and where your DETI 513 00:26:37,240 --> 00:26:39,920 Speaker 1: is sitting, you give John a call or your bank 514 00:26:40,040 --> 00:26:42,600 Speaker 1: or your mortgage broker. But you get this looked at 515 00:26:43,280 --> 00:26:47,359 Speaker 1: sooner rather than later, keeping in mind the backlog currently 516 00:26:47,600 --> 00:26:52,159 Speaker 1: with the banks in restructuring, refinancing. Of course those new 517 00:26:52,200 --> 00:26:55,920 Speaker 1: home loans. As I said, will pop your notes and 518 00:26:56,000 --> 00:26:59,040 Speaker 1: your details in the podcast notes for everyone. I can't 519 00:26:59,160 --> 00:27:03,000 Speaker 1: thank you enough for your time that was so incredibly helpful. 520 00:27:03,160 --> 00:27:05,440 Speaker 3: Thank you so much, Thanks Kenna, thank you for the 521 00:27:05,480 --> 00:27:06,000 Speaker 3: opportunity