RAMS Shares Drop 25% as Low-Doc Lenders Struggle to Survive

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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.

Dan Denning
The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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