The future of Australian property prices

Finance industry giants are spending millions of dollars on legal fees fighting homeowners who have successfully exited their mortgages because they were stung by sub-prime-style lending practices during the last property boom.

An investigation by The Australian has revealed several mortgage providers and mortgage brokers engaged in improper lending practices in the years before the global financial crisis hit in 2008, including inflating borrowers' income and ability to repay debts to secure so-called "low-doc" loans.

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Ms Brailey, who has been tracking low-doc loans and loan application issues with The Australian for several years, said she had uncovered examples of loan application irregularities in loans approved by 14 banks and other lenders.

She obtained emails illustrating imprudent lending practices by 36 banks and non-bank lenders, including all of the major banks.

"We're about to see a major train wreck," she said.

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jank said:

I'm bearish on Australian property as I have said before on this thread but the person who borrowed huge sums of money that they cannot pay back at all is also responsible. To blame it all on the banks is just shifting responsibility on to someone else. I have heard it all before in Ireland.

If you borrow too much and cant pay it back then who's fault is that? People need to learn personal responsibility.

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Julia said:

I'm not at all defending inappropriate lending. It's despicable and stupid.
But I'm just sick of no blame being attributed to the person acquiring the loan. Do you really believe the borrower had zero responsibility?

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CanOz said:

SCM, in your data cache do you happen to have any data on which australian banks are most exposed to these subprime loans?

Thanks for the info...

CanOz

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Starcraftmazter said:

Unfortunately not. It is irrelevant too in my view

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Starcraftmazter said:

Unfortunately not. It is irrelevant too in my view - and the reason is that there is no possible way to know which loans are subprime until the recession kicks in full blast and people start losing their jobs en mass.

The worst loans are written during the best of times.

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prawn_86 said:

But wouldnt it make sense to short the bank with the highest exposure? This is a stock forum after all and shorting stocks is a legitimate way to make money

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So, what is the wash up of the last few days of this debate? The Government’s senior bureaucrats have conceded that there will be no revisiting the 2008/9 stimulus package in the event of a global recession. Only the automatic stabilisers will be allowed to run the Budget into deficit. The principle ratings agency, S&P, has declared that that won’t be enough to prevent a downgrade of the sovereign. So, in the event of a global recession, we have lost both the ability to provide active counter-cyclical fiscal support and the efficacy of monetary policy has been damaged.

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young-gun said:

Yes, but a key point that everyone seems to be forgetting here is that people are stupid. If you let them take out a million bucks on 50k a year some will. I'm not covering for people's stupidity, they are just as much at fault, but the banks have the ability to stop such decisions taking place to begin with. Not to mention you have a generation of bulls screaming at the top if their lungs that property never goes down, coupled with the media banging on about ut for years, and you can understand why some unsuspecting families want to try and get into the market sooner thn they can afford.

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jank said:

Also, if a bank gives a person $1 million who earns 50,000 a year then they are also stupid.

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prawn_86 said:

Exactly, and yet they ended up getting bailed out with taxpayer funds. They get an out for stupidity, why shouldnt stupid individuals do everything they can to try and get bailed out for their stupidity?

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jank said:

Which bank in Australia got bailed out?

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numbercruncher said:

Dude no need to bury your head in the sand screaming denial - its happening and the banks are spending millions to try stop the flow becoming a flood ...






http://www.theaustralian.com.au/news/investigations/hope-for-mortgage-victims-as-homeowners-winning-battle-against-banks/story-fn6tcs23-1226382076020

Pretty reputable source ....

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