a warning for the leveraged up speculator, page-17

pwinne

As we are often told, Australia is full recourse. So the bank will get its money back regardless right?

Imagine you are a bank, see property go slightly into negative equity. You (internally) suspect prices may continue to go down. This will hurt the economy, raising doubts on the employment security of the debtor. The sooner you pull the plug on situation, the smaller the residual negative equity debt to be repaid, and the better chance of getting it before the debtor goes bankrupt assuming they loose their job and/or can't service the residual loan.