| Reverse mortgages lure more retirees
CASH-STRAPPED retirees are rushing to spend money tied up in the value of their homes under innovative loans that do not require regular repayments. More than 27,000 Australian borrowers have drawn more than $1.5 billion in equity from their homes to spend on overseas holidays, home renovations, medical bills and living expenses. And the number of reverse mortgages is doubling every 18 months as baby boomers are reaching retirement and finding they do not have enough money to live the way they want. Industry forecasts suggest the value of reverse mortgage loans will grow to about $5 billion by 2015. Eligible borrowers with large equity in their homes are able to be paid part of it, either in a lump sum or through regular payments. Borrowers are not required to make repayments on the loan until they sell their house or die and interest on the loan is capitalised.
American Home Mortgage Expects Reduced Earnings in the First ...
MELVILLE, N.Y.--(BUSINESS WIRE)--American Home Mortgage Investment Corp. (NYSE: AHM) announced today that it expects lower income in the first quarter and full year 2007 than previously forecasted due to conditions in the secondary mortgage and mortgage-backed securities markets. Michael Strauss, American Home's Chairman and Chief Executive Officer, commented, "During March, conditions in the secondary mortgage and mortgage securities markets changed sharply. In particular, these markets were characterized by far few buyers offering materially lower prices, both for loan pools and for "AA", "A", "BBB" and residual mortgage securities. These changes had a significant, adverse impact on our Company's first quarter results, reducing our gain on sale revenue and causing mark-to- market losses in our portfolio.
RBA Reassuring on Banks
Within a month, four of the Big Five banks will produce interim earnings while the Bank of Queensland trots out its figures in the middle of next week.The ANZ, St George, National and Westpac will all produce solid profit performances in the first half of the 2007 financial year and analysts are generally agreed that the main points to be watched will be the level of bad and doubtful debts in housing mortgages and personal, such as credit cards.And while there were fears there could be an upsurge in the level of dodgy loans and actual losses, it is now becoming clear from the APRA and Reserve Bank data, plus the RBA's financial stability statement on Monday that much of that concern was misplaced.In fact the RBA's comments on the banks and the banking system should be read by all bank shareholders: unless the RBA has made a horrible error, it's clear there are no black holes in bank balance sheets.Perhaps the most interesting area to watch is the implicit warning about the contraction of lending margins on housing mortgages because of low demand and high levels of competition.The RBA points out that there are hardly any mortgages being sold where the borrower is paying the bank headline adjustable or fixed rate, such is the intensity of competition.Banks' share prices have increased by around 14 per cent over the past six months, slightly underperforming the broader market.
|
