Will the low-doc lenders survive the credit crunch? Shares in RAMS Home Loan Group (ASX:RHG) fell as much as 25% yesterday. Ouch. The fall in share price is just part of the story. The other part is that low-doc lenders are raising rates on borrowers.
The Australian housing party may not be over yet. But if you want to have a good time, you’re going to have to bring your own beer, or at least a larger down payment.
“While the most significant price moves came from RAMS on Tuesday,” reports George Lekakis in the Herald Sun, “three other lenders – RESI Mortgage Corp, Collins Home Loans and AMO Group – have all increased rates on low-documentation loans,” reports George Lekakis in the Herald Sun.
Interest rates on mortgages from “non-traditional” lenders now run around 8%. That spells trouble for borrowers who can’t get loans from “traditional” lenders.
The Daily Reckoning Australia