I'm fine with taking responsibility for my borrowing. I resisted bending the rules even slightly so I could get a "low doc" loan to buy an investment property about 12 years ago. If I had bent the rules, I would be about $200K richer now. I don't care, real estate has been kind to me and many of us older crew..... but I think the 'value' of our assets are over-inflated. Australians traditionally love their castles and our home is our biggest asset.... so homes have gone up in value.... add to this all the funny money, dodgy money floating around, real estate has had some big pumps blowing up "values".
Would think that if more of the general population understood the real levels of capital banks have relative to the loans they have given out, they wold be shocked. You can bet your inflated assets that once banks run into trouble they will hold expect mortgage holders, depositors, their bond holders, government authorities to help them out..... what about BANKS wearing some of the responsibility for their lending? I suppose the banks will point the finger at brokers, developers. What about the banks' role in the boom/bust cycles?
If my property halved in value I would be OK. Many here would..... I suppose those with heavy borrowings would be in a different position. That includes investors and more importantly, younger people who have purchased in the last decade or so. The banks lending, lending, lending, increasing their profits..... reducing depositors is reducing their "liabilities" in their books.... the banks whinge about capital levels required, regulation..... but they haven't acted responsibly with deregulation. Fairly obvious isn't it?
