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It's all about The Block...

The news has been all about The Block since last night's auction on Channel 9 but among all the general hysteria about who deserved to win (or who didn't!!!) there was an interesting line at the end of a news.com.au article today.

The article is mostly about an Australian tech entrepreneur who bought both penthouses for approx. $2.9 million each. These sale prices were significantly lower than expected, and singularly lower than other smaller apartments, but that's not where the interesting part is.

Also for the first time on The Block a single buyer's advocate bought four of the five available apartments for his differing clients but this still isn't the interesting part.

The most interesting part was from the buyer's advocate when he said that it was good news to get a 100 per cent clearance rate and the property market needed this confidence (which is true) but he also said "We don’t have a property problem, we have a credit problem" and "I’ve got people that want to buy property but they cannot get finance, so it’s not a property problem, it’s a credit problem."

In the light of the Banking Royal Commission, the big banks and smaller lenders are certainly tightening their lending processes and as we have been hearing; many needed to!

The difficulty with calling it a 'credit problem' is that is sounds like a reminiscent wish for things to stay as they were and this can't happen. Being transparent about lending practices benefits everyone in the long run. Yes there are likely to be costs incurred by the big banks to rectify some situations but this will all even out in the end. I talked about this more a couple of weeks ago (here).

It's a good thing for us all to save more and be able to afford loans without mortgage stress. This helps us individually, our families and those around us.

Original article here.