Thursday, May 21, 2009

Banking Madness!

My adventures with Bryce the Banker have kept myself and many others amused and there is yet another tale to be told about the ASB in Albany and its approach to customers now that the economic wolves are seemingly at their customer's doors.

When I visited Bryce the last time I asked him what the chances of me getting a loan to buy an investment property was.

He kind of laughed nervously and mentioned it was harder now than it was a year or so back but thinking to myself, considering I seemed to be the only middle class Kiwi who didn't buy an investment house during the housing boom, I now thought it was a good time to buy one.

Consider this:

1. Housing is approaching realistic asking prices
2. Your expenses are now likely to be recouped by the rent received
3. Interest rates are lower by at least 2% than during the boom

But then also think about this:

Even though my financial position is now stronger than it was a few years back and the investment case to buy a house for rental purposes is much more attractive, the ASB Bank and probably yours too is unwilling to lend as much money for that purpose.

Interesting that in some cases at the height of the housing boom that banks were lending more than 100% mortgages and throwing money at monkeys while now they will barely consider you even though you now back their deposits and lending through your taxes.

A case for some contrary investment thinking, in other words good sound financial practice, is clearly needed within our banks and the staff that they employ.

Treat each customer and lending case on its own individual financial merits and you will please your good customers and keep your CEO from losing sleep at night.

End of lesson.

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The Art of Contrarian Trading: How to Profit from Crowd Behavior in the Financial Markets (Wiley Trading)
The Art of Contrarian Trading: How to Profit from Crowd Behavior in the Financial Markets (Wiley Trading) by Carl Futia
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