Los Angeles

[Lizard]

Australia is a super hot RE market now and I guess they are too busy to see the carnage about a 15hr flight away?

ING Direct, Australia’s fifth largest lender, is preparing to sell loans that have no fixed term and no requirement to repay any capital along the way.

At current rates, the interest-only loans would cut repayments on a $300,000 mortgage by $5000 a year.

“People are needlessly being denied the chance to buy a property while prices spiral rapidly out of their reach” ING Direct CEO Don Koch said. “There is an urgent need to provide more affordable options and borrowers should be able to choose whether they want to repay the capital, or not.”

Mr Koch wants to position the bank as a “mortgage partner for life”, with borrowers carrying the same interest-only loan from property to property for as long as they wish, accumulating equity from rising house prices as they go.

Then, as they near retirement, they could sell their property for a big enough profit to pay off the original loan and buy a smaller place outright, leaving them mortgage-free. Or, they could keep the mortgage going and repay the original capital from their estate, after death.

[stop_bailouts]

[Nanomug]

OMG!  Australia must have changed a bit in how they do mortgages since I lived there several decades ago.  At that time the mortgage length was based on age.  They allowed mortgages to be the time between taking out the mortgage and retiring.

It does sound like ING is doing shady deals.  It never occurred to me that they lended in other countries.

[LB1]

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Nanomug wrote:

OMG!  Australia must have changed a bit in how they do mortgages since I lived there several decades ago.  At that time the mortgage length was based on age.  They allowed mortgages to be the time between taking out the mortgage and retiring.

It does sound like ING is doing shady deals.  It never occurred to me that they lended in other countries.

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Huh? I thought ING is European to begin with.

[STARCHY]

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Lizard wrote:

Australia is a super hot RE market now and I guess they are too busy to see the carnage about a 15hr flight away?

ING Direct, Australia’s fifth largest lender, is preparing to sell loans that have no fixed term and no requirement to repay any capital along the way.

At current rates, the interest-only loans would cut repayments on a $300,000 mortgage by $5000 a year.

“People are needlessly being denied the chance to buy a property while prices spiral rapidly out of their reach” ING Direct CEO Don Koch said. “There is an urgent need to provide more affordable options and borrowers should be able to choose whether they want to repay the capital, or not.”

Mr Koch wants to position the bank as a “mortgage partner for life”, with borrowers carrying the same interest-only loan from property to property for as long as they wish, accumulating equity from rising house prices as they go.

Then, as they near retirement, they could sell their property for a big enough profit to pay off the original loan and buy a smaller place outright, leaving them mortgage-free. Or, they could keep the mortgage going and repay the original capital from their estate, after death.

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^^^ its called "rent"

[STARCHY]

for those interested, here is an excerpt and a link to a recent NYT article on Australian Central Banks continual rising of interest rates:

"The Australian central bank raised its key interest rate Tuesday by a quarter of a percentage point to 4.25 percent, in a sign that it thought that the Australian economy was on solid enough footing to be weaned off the low rates.

It was the central bank’s fifth rate increase in six months. Australia began nudging the cost of borrowing up last October, becoming the first major economy to do so since the global financial crisis in late 2008."

http://www.nytimes.com/2010/04/07/business/global/07ozrates.html

[Lizard]

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Nanomug wrote:

OMG!  Australia must have changed a bit in how they do mortgages since I lived there several decades ago.  At that time the mortgage length was based on age.  They allowed mortgages to be the time between taking out the mortgage and retiring.

It does sound like ING is doing shady deals.  It never occurred to me that they lended in other countries.

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ING is Dutch.

ING is the equivalent of Citibank where the Dutch government had to step in and provide billions in bailout money. Despite this they remain on shaky ground.

Although many know them for their formerly high interest paying orange account, few were aware for a time these accounts had nothing backing them, no FDIC. Just the "good faith" of the company.

The loans they are proposing is equal to rent and the idea that someone can sell at a profit when they retire or die is idiotic. Suppose the property is worth less?

Can't imagine how this flies, regulators asleep at the switch or paid off.

[stop_bailouts]

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Lizard wrote:

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Nanomug wrote:

OMG!  Australia must have changed a bit in how they do mortgages since I lived there several decades ago.  At that time the mortgage length was based on age.  They allowed mortgages to be the time between taking out the mortgage and retiring.

It does sound like ING is doing shady deals.  It never occurred to me that they lended in other countries.

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ING is Dutch.

ING is the equivalent of Citibank where the Dutch government had to step in and provide billions in bailout money. Despite this they remain on shaky ground.

Although many know them for their formerly high interest paying orange account, few were aware for a time these accounts had nothing backing them, no FDIC. Just the "good faith" of the company.

The loans they are proposing is equal to rent and the idea that someone can sell at a profit when they retire or die is idiotic. Suppose the property is worth less?

Can't imagine how this flies, regulators asleep at the switch or paid off.

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Are you saying they USED to be uninsured accounts? Because they definitely say the accounts are FDIC insured.

[__________]

First of all, ING Direct and ING Group are two different institutions. Ing Direct, is the American arm of ING group and is currently for sale. The Canadian arm of the company having been sold early this year. 

Secondly, ING direct accounts in the US were always FDIC insured, I have no idea where you got the idea that they weren't.

[Jazzman]

ING is Dutch, but it has a US subsidairy which is FDIC covered. I recently saw ING in Malaysia offering low rate mortgages, which makes sense if they are well into the Australian market. Australian homes prices have been in the news for some time. Home ownership is a bigger deal in the English speaking world, as is free flowing capital. Yeah, we are the bad guys of real estate. Somebody from Canada posted here a while back showing the little huts that are going for a million loonies. I guess the point of the post is in Mr Koch's failure to mention the connection between creative lending and spiralling home prices.