"If banks increased their deposit requirements we could lower rates and there would be no housing bubble. Alternatively we could curb negative gearing. "
Key word = If.
According to this piece below non big 4 lenders have relaxed requirments to capitalise on a "growing" sub prime sector. What happens when rates are lowered in an environment where banks have been relaxing prudent lending as part of the initial GFC response?
http://www.theaustralian.com.au/news/nation/low-doc-risks-rise-in-loans-scramble/story-e6frg6nf-1226481371845
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