AFG 4.40% $2.39 australian finance group ltd

the mortgage business may be a good asset

  1. 2,848 Posts.
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    AFG went into providing mortgage finance in the commercial market in europe- and are now seeking to dispose of that operation- Its market value will depend on the outlook for property prices, and the market sentiment in general -but its worth remembering- when the market is rising the lender loses from the loss in value of the principal with inflation and the borrowers equity increases. When the market goes down and it happens much faster than it went up usually, the lender is more protected than the borrower. The purchasing power of the principal loan amount, in terms of what the loan repayment will buy, becomes much higher when it is paid out. The income is much higher than a bank deposit meanwhile. Economics 101.
    But in a catastrophic situation- no one wins. The lenders pain is less perhaps. Values are down in europe but not as far as in the UK so far.
 
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