In which case they sell every single asset of value (the house and every thing else). Given an initial deposit and any repayments of principal from loan commencement the banks might take a haircut on some home loans but my understanding is they have been more conservative the last few years in their lending anyway.
And many of these would be loans on second properties which means that if some people have overgeared across multiple properties then other assets (including the family home) might come into play which would take the bankruptcy option off the table.
Unless house prices drop 20%+ just how much are the banks likely to lose on residential mortgages given people still need a place to live and rent often costs as much as mortgage repayments?
Purely speculation but small business loans secured against property could be more tricky......
WBC Price at posting:
$15.51 Sentiment: None Disclosure: Not Held
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