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Tuesday, 24 April 2018

The limits of interest-only lending

The P&I cliff

A very good speech was uploaded by the Reserve Bank of Australia (RBA) today on the limits of interest-only (IO) lending, and the reset underway. 

Assistant Governor Kent drew many similar conclusions to my report for investment funds both in terms of the timing and magnitude of IO resets.

Perhaps due to time constraints, the speech was light on the secondary impacts of the reset, both for the housing market and otherwise. 

This has been an area that I've consulted upon often on with hedge funds and long/short funds over the past six months, with the Royal Commission into Banking misconduct now adding a new layer of implications and complexity. 

Investment funds can order report samples and order forms here