bearbear,
You really live up to your nickname. Very bearish

If the proceeds of auction is enough to settle the outstanding loan, then no bankruptcy proceedings will be initiated. Otherwise, the bank can make the borrower bankrupt. As for CTOS blacklist, since it is in the court process so the case will appear in CTOS

To me, if landed it is undervalued. If highrise, it is overvalued

Dead chicken coming soon

Did BNM implement LTV 60% in 2011 ? How come nobody talk about it ?

This post has been edited by Showtime747: Dec 26 2013, 08:54 PM

Wah you work in OA office or bank credit dept or AKPK ? Everyday see bankruptcy case no wonder you are influenced

Your link's first paragraph says,

"In finance, subprime lending (also referred to as near-prime, non-prime, and second-chance lending) means making loans to people who may have difficulty maintaining the repayment schedule, sometimes reflecting setbacks such as unemployment, divorce, medical emergencies, etc.[1] Historically, subprime borrowers were defined as having a FICO scores below 640, although "this has varied over time and circumstances."[2]

These loans are characterized by higher interest rates, poor quality collateral, and less favorable terms in order to compensate for higher credit risk.[3] Many subprime loans were packaged into mortgage-backed securities (MBS) and ultimately defaulted, contributing to the financial crisis of 2007-2008.[4]

Proponents of subprime lending maintain that the practice extends credit to people who would otherwise not have access to the credit market. Professor Harvey S. Rosen of Princeton University explained, "The main thing that innovations in the mortgage market have done over the past 30 years is to let in the excluded: the young, the discriminated-against, the people without a lot of money in the bank to use for a down payment."

Let's look at what is said in the last paragraph. "The young" and "people without a lot of money in the bank". That reminds me of YOUNG fresh graduates and FLIPPERS who take advantage of DIBS and Zero Entry Cost. Are you sure this does not qualify part of Malaysian home mortgage as Sub-Prime ?

bearbear, in your work, you see bankruptcy everyday. When day in day out you are in contact with person in financial trouble, you will be influenced and thought that the market is bad. Really really bad.

Look at the statistics as a whole.

http://www.thestar.com.my/News/Nation/2013...ankruptcy.aspx/

2007 13,238
2008 13,855
2009 16,228
2010 18,119
2011 19,167
2012 19,575
2013 16,306 (up to Sept)

Of these bankrupt people, the percentage of types of loan in the highest to lowest order are

Car loan 26.14%
House loan 17.62%
Personal loan 15.50%
Business loan 12.39%
Credit card 4.18%

So, of the 16,306 bankruptcy cases which occur up to Sept 2013, only 2,873 cases are related to housing loan bankruptcy in 2013. Yes, if in your work you see bankruptcy day-in day-out, then you may think that everybody is going to get bankrupt. But overall, it is still too small a number that would cause the bubble to burst. At least not high enough in number to allow us to pick dead chicken yet.

We must wait for the economy to collapse, or BNM increase the interest rate to >3% in order to see dead chicken everywhere on the street.

Correct. That's why I said, we must wait for economy to collapse

I have prepared my cash to pick up dead chicken

The trend is too mild. It is just correlation to the increase in population and transaction. What I need is a big bump up in the trend to be able to see flippers suffer

What I am afraid is the QE only taper 10%-20% (-$10b now). If QE is still in the >$50b region, how to have interest of >3% ? Those Americans are protecting themselves only. Taking advantage of their currency and make the rest of the world suffer

I will bet with you they have no guts to do that

Too slow to my liking. Given time to the flippers, they can plan to get out and the effect is not significant any more.

That's why crisis always come as a surprise when nobody predicted. Now we all here predicted the market will crash/slow down, everyone will get prepared and the effect of crisis will be smooth out. Damn !

If we keep on warning them, they will be alerted. Many developer allow transfer before vp

We are educating them now as we talk. Better keep quiet so they will be ambushed.

I consider myself DDD camp because I want to pick some dead chicken. I hope the flippers will suffer big time. But when the argument goes into high unsustainable property prices vs low growth in income, we have to zoom into our unique market development over the last 3-4 years. What is the cause of high property prices even without income growth ?

The demand which causes the soaring property prices is not in proportionate to our income growth. On the other hand, the demand is mainly due to the rise of a new category of buyers who previously cannot afford to buy properties but now become a buyer thanks to DIBS+ZERO ENTRY COST.

This new category of buyers typically are young FRESH GRADS and FLIPPERS who take advantage of the bank and property developers' innovation only seen for the last 3-4 years. We can see in the new launches more and more young people which previously we only see uncles and aunties. That is because previously when you want to buy property you need to prepare at least 15% of purchase price. But now, although this new category of buyers do not have the initial capital of 10% for deposit + 5% incidental costs, they now also become legitimate buyers and add fuel to the demand. This is not possible before the introduction of DIBS + ZERO ENTRY COST. Look at the 13th GE. There are additional 2.5 millions of young new voters. Of these 2.5m people, the are many who joined the bandwagon and cause the increase in demand in property market thanks solely to DIBS + ZERO ENTRY COST

To be fair, these FRESH GRADs are legitimate buyers. They can afford the installments as long as they have job. So these category of new buyers are financially sustainable. Whereas for the FLIPPERS, they are gamblers and will face trouble if the market turn south and they can't flip their properties.

With the policy curb on DIBS + ZERO ENTRY COST introduced in 2014, suddenly the demand from these FRESH GRADs and FLIPPERS vanished. So the market demand is expected to be back to normal from this year onwards.

I hope this argument can explain the disparity of house prices vs income growth we see in the last few years

From the hindsight, there may be Bangla in the register, but not to 40,000. Opposition is good at propaganda

GE interval is 5 years lah. So 2.5m / 5 = 500,000 every year. Still a hell lot of new demand previously cannot afford

Can they afford ? Fresh grad starts with ~RM2.5k. With 2-3 years working experience maybe ~RM3.5k-RM4k. They combine with spouse then household income is ~RM7k-RM8k. With stupid banks previously willing to loan up to 60%-70%, they can easily afford properties >RM500k

Good that Bank Negara has stopped the stupid DIBS etc. But those fresh grads who bought were lucky. They manage to own properties even without down payments. Now new fresh grads who want to buy no more affordable. They got to save hard for 6-8 years before they can think of property

Yes I think so too. The new launch will be very very few this year. Without DIBS + Zero Cost Entry, many people will think twice to invest >RM100k. As the demand is reduced, so will supply until it reach a new equilibrium. Good times are over