TODAY WE SAY 90% - Government telling lies and using fudged STATS

BFCSA: In 2005, Low Doc Interest Only loans were recorded as 60% of LOAN BOOKS

Revealing:

The share of investor loans that are interest-only is much higher, at around 60 per cent in 2005.  .........

An APRA survey of approximately 100 lenders in December 2004 found that around one third of the valuations

requested by lenders were based on only an external inspection, or were conducted off site using information

from the contract of sale, Valuer General records, or desk-based electronic methods.

Submissions – Housing and Housing Finance Joint RBA-APRA Submission to the Inquiry into Home Lending Practices and Processes

House of Representatives Standing Committee on Economics, Finance and Public Administration
8 August 2007

http://www.rba.gov.au/publications/submissions/housing-and-housing-finance/inquiry-home-loan-lending-practices-and-processes/

Interest-only loans have also become more common, particularly for investors. These loans do not require borrowers to make any repayments of principal for up to 10–15 years (after which the loan typically converts to a principal-and-interest loan), and hence have an initial repayment amount that is lower than on a principal-and-interest loan.

We estimate that, in 2005, a little over 15 per cent of new owner-occupier loans were interest-only, up from 10 per cent in 2003.^[2]

The share of investor loans that are interest-only is much higher, at around 60 per cent in 2005.

This presumably reflects the tax deductibility of interest payments on these loans. Overall, in 2005, interest-only loans accounted for around 30 per cent of new housing loans and a slightly lower share of outstanding loans.

Greater use of alternative valuation methodologies

There has been a trend towards the use of lower cost alternative valuation methodologies in credit assessment. Traditionally, valuations were based on a full external and internal inspection of the property.

But an APRA survey of approximately 100 lenders in December 2004 found that around one third of the valuations requested by lenders were based on only an external inspection, or were conducted off site using information from the contract of sale, Valuer General records, or desk-based electronic methods. There is anecdotal evidence that this share has risen further in recent years. These alternative valuation methodologies tend to be used by larger lenders for fully documented, low-LVR mortgages.