Back on 7 May 2011 the Australian reported ANZ had $1 billion worth of mortgages in arrears over 90 days? Westpac had $1.46 billion in arrears over the same time?
NAB was flat (because it hadn?t chased first-home buyers as hard as the other Big 4 banks). The Finance News Network reported on 15 June that ?The Commonwealth Bank of Australia? [has] the greatest exposure to the rising number of missed mortgage repayments.?
So why would banks start cutting deals ? and taking a hit to their bottom line ? when they?re already billions of dollars in the hole on late payments?
Well, the banks want to get paid. And it?s hard to get paid when you?re repossessing homes and trying to flog them off in an already declining market.
They?d rather make 80% of what they were going to make from you than 50% ? or less ? selling homes nobody wants? or can afford.
Perhaps they?ve seen the news of American banks demolishing repossessed homes. It?s cheaper to knock down a house they don?t want than it is to keep it on the books. As Bloomberg reported:
?Disposing of repossessed homes is one of the biggest headaches for lenders in the U.S., where 1,679,125 houses, or one in every 77, were in some stage of foreclosure as of June, according to research firm RealtyTrac Inc. of Irvine, California. The prospect of those properties flooding the market has depressed prices and driven off buyers concerned that housing values will keep dropping.?
If all the mortgage repayments stopped coming through ? and there was a glut of repossessed homes for sale on the market ? property prices could drop through the floor.
The Age reported this morning: ?Right now there are 43,000 properties for sale on the Melbourne market ? the largest amount of stock for any capital city in Australia. This time last year there was just over 29,000 properties. And back in early 2010 there were only 21,000 properties for sale.?
Look at those numbers. There?s already a housing glut. What do you think would happen if another $200 million worth of properties came up for sale in Victoria?
If this is a sign that things are getting shakier, how much longer ?til the property bubble stops deflating and pops?
