Shareawealth, I think that was me who said that banks would ask for topping up. I maintained that would happen when the housing market as a whole start to go pear shape. This is the best reflection of reality as opposed to the blatantly ridiculous picture being painted of "soft" market finding it's footing. Price are in free fall.
Many here then ridiculed me and insisted that the banks would never do that because it is bad PR. Their argument as usual is that they have't seen the banks doing it (and therefore they won't). As I said,anyone younger than 43-45 (in the workforce back in the recession we had to have in 1990) doesn't know what a recession is. Anyone in Australia (regardless of age) hasn't seen a housing bubble as catastrophic as the one that is bursting now. Investors speculators and mortgagees are completely in uncharted waters.
The banks are facing a nationwide bust where the loan books can deteriorate exponentially when investors start to stampede. In the rosy time, when defaults were few and far between, they could afford to be lenient. They must protect their balance sheet before the hedge fund vultures start to rip them to shreds on the ASX.
Problem here is their action will lead to more pain and lower house prices which will result in credit squeeze and rationing. While credit demand falls further. House prices then go into a collapse with no support and would be buyers are either too jittery or having no access to funds. This lead to a disorderly exit.
420,000 revalued to 320,000, that a 25% drop and the bust is just starting to accelerate. If the banks lending policy is reflected similarly, then there goes your house price drop. Compound the problem across Melbourne for instance and the bank's load books have deteriotaed by many tens of BILLIONS of dollars already. The hedge fund vultures surely can't be far away.
According to RPData, house prices have barely budged and in fact started to rise.
Perhaps you should get CJ to accompany your mate to correct the CBA manager that the property should be revalued up.
