ABC’s The Business does liar loans

Well worth a watch. Full article here. Video via Martin North.


  1. You cant tell me the govt didnt know all this was going on. They have turned a blind eye for a very long time on all this. How come now all of sudden its time to do inquiries and dig deep to see whats been going on with improper bank lending. Why didnt they do this when things were booming? Same BS that happened over here in the US. Funny how no one went to jail in the US for all the fraudulent bank lending that happened.

    • If banks only lent to people who could afford to pay it back, the property market would crash, and no-one in their right mine would wish for that. Better off to just keep cutting rates, and extending loan terms, and looking the other way, and if they really get in trouble they can always sell at an enormous profit and everyone is happy.

      • I would wish for it. The property market crash is going to be painful but in the long run will be beneficial. The great Australian property bubble has done enormous damage to the economy. Ultimately the market will say that enough is enough.

      • I don’t think anyone can comprehend what a full blown housing crash will be like here as this sh!t show has gone on far too long. Although I also think we need one, I’m worried we’ll turn in to Brazil or something and we will get cheap houses but also FA work, money etc.. with massive crime. There isn’t likely to be a good outcome at this stage.

      • billygoatMEMBER

        @ Dan
        I wish for it even if its uglier than anyone can imagine. Maybe everyone will have a taste of how truly s$$t it is to be out of a home and struggle, literally spending every last cent to put a roof over ones head or making do with car, cardboard and tarps.
        Foreign students, tourists, workers and shoppers alike stepping over 40 something woman sleeping rough in the corridor of Melbourne Central as they line up to by chain store multi cultural nosh – factory sushi!

      • Bill, Australia has no culture or social bearings similar to the USA. I worry that I might need a gun to ward off would be carjackers or home invasions. This sh!t is already happening now at a time where many people are pretending to be rich. What happens when unemployment and rates rise? As debt responsible people it is unfair that we get dragged into sh!t just because others are irresponsible.

    • It’s called plausible deniability…a means of avoiding culpability. They are changing the narrative because they can see what is coming/arriving shortly.

    • FiftiesFibroShack

      It’s so brazen that you’d think the banks have been given an assurance that they’ll never be held accountable.

      A couple of years ago the presenter of that piece, Alysse Morgan, posted a picture of her own home loan application. Her income had been changed to a higher amount. If they’re willing to do that to a reporter that works for a major broadcaster, one who reports on finance, it must be the norm.

    • nexus789MEMBER

      It will only come to a head with a downturn. While they they keep the plates spinning this stuff remains hidden.

  2. Bam! That has been a very long time coming. Thank you for keeping up your stance team MB. You’ve collectively not wavered, changed the way I’ve thought and learned about finance and economics for the better.

    Thank you.

  3. The new liar loans are for investors claiming that they live in home. There is no verification.

    The investor simply needs to state that they live in the home and they get owner occupier rates. Never mind they also “live’ in all the other premises that they have mortgages for at the same bank.

  4. Turning the Australian Property market into a giant casino was the most stupid idea ever. And instead of letting people lose, the house (government) kept bailing them out every time it looked like people were going to lose. Inevitable result, everyone wants to gamble.

  5. This is all very simple. Brokers are the Agent of the Banks. The banks are responsible for verification of the application.
    If the numbers don’t add up its because there is a massive control fraud on foot. The books have been cooked.

  6. Would ANZ really have new loans at 45% Liar Loans? That seems incredible or am I reading the table wrong?

    • You’re reading it right. The way prices are in Inner West Sydney makes me wonder if there are any loans being written that aren’t liar loans,

  7. TailorTrashMEMBER

    Excellent stuff ….great to see the sewer is starting to flow over …..this is going to blow up real bad for the banks ……and look who’s circling….the old Maurice Blackburn and no doubt plenty of other law firm see some dosh here …..the punters will be signing on in droves to try to get out of the stupid loans they thought would make them rich ……..this is stupid Straya on a monumental scale ……

    …and ya gotta love that “ it would appear everyone in Straya is earning a ridiculous amount of money “……..of course they are …it’s what you would expect in a nation of baristas,uber drivers and dabbawalas ……….this RC is going to be fun …..if this is on the ABC news before we start it can only get better.
    ….and keep hammering it chaps ……you were on to it from the start

    • Lawyers… I’m almost sympathetic to the banks. The woman in the video is as dumb as a post, but the hairdressing c#nt’s been making my life difficult for almost a decade. What ever happened to “caveat emptor”? She should be allowed to fail without the public picking up the tab.

  8. I can’t cop this growing suggestion that borrowers are being hoodwinked in this process. They know EXACTLY what’s going on, that’s why when one or more banks knock them back on an application they head straight for a mortgage broker who will make it happen. There needs to be some personal responsibility here. Yes the banks are turds, but they’re often acting in partnership with greedy people. If you can’t afford something you shouldn’t be buying it.

    • When there’s a feeding frenzy the Sharks don’t care if the pilchards are 0.3% Mercury as long as they’re getting in on the action.

    • Will be interesting to see how it goes
      there are class actions under way
      My call is the bank as the senior party (ie supposed to most familiar with due process etc) has a duty of care to the punter.
      Just how much duty of care, the learned courts will tell us, but any duty of care x the number of claimants will be HUGE.

    • All borrowers are being hoodwinked – not just the ones who lie. Its an arms race of deceit as prices rise people who are compelled to lie to compete with others who are lying. Everyone ends up paying more on the price of their house due to inflated loan sizes. Likewise those who write mortgages are compelled to accept dodgy applications, or lose the business to those who will.

    • Correct, Jimbo, but sleazy lawyers are always there to advise them how to get out of their rsponsibilities when the shite hits the propeller blades. The charge is responsible lending NOT borrowing or always accuse the party with the deepest pockets or there’s no point sueing, ah?

    • My 7 year old LOVES cars, wants a Tesla or a Mustang – so I sent him down to get his license – Vic Roads said he was too young to drive. So he went to a Vic Roads Authorized Broker and they said no worries here’s a license from Vic Roads.

      The Banks have the duty of care to advise customers HOW MUCH they can borrow – that’s their job. I wouldn’t have a clue…

      If the banks out-source that to a broker – it is STILL the banks responsibility – I see where you are coming from about personal responsibility – but its the banks clear stated, absolutely mandated, legislated, regulated JOB to provide loans that are reflective of peoples ability to pay them back – no question about this at all.


    • True, but that’s what regulation is for – in this case, to stop banks from making too many risky loans and thereby creating a systemic risk.

      If it were the case that the mortgage market would find a natural stable equilibrium through the rational and sensible behaviour of individual borrowers, then we wouldn’t need any regulation. (which is why economics as a discipline is partly nonsense, because it relies on an assumption that is proven to be always wrong when it matters most).

      So the dodgy behavour of the banks actually deserves its comeuppance in the form of lawsuits, you could say this is the market performing as it should (if you also accept that banks shouldn’t have to worry about whether borrowers can pay or not). Its just the flip side of foreclosures.

    • Mostly true but that is what the legal system will decide. Getting this into courts is the only way to get justice, which includes letting many borrowers burn.

    • I’m still only smelling the chops and snags at the BBQs. That’s the litmus test – once the property fear overpowers that it’ll be on like donkey kong.

    • “It’s as if a billion sphincters kazooed the Imperial march all at once, … and then silence”
      “I fear something terrible happened here…”


    It’s high multiple lending that ‘does in’ the Banks and their customers … as they learned with the Irish housing bubble collapse in 2007.

    When the housing bubble burst there … putting all its Banks to the wall and requiring bailouts exceeding 70 billion euro or about $NZ 109 billion (note interview with Prof Bill Black and others link below).

    Irish housing across its metros on average went from 4.7 times annual household income in 2007 to 2.8 a few years later … refer the schedule of Demographia Surveys at .

    Australia is currently 5.9 times … New Zealand 5.8.

    What was the capital base of the Irish Banks in 2006 and 2007 ?

    If a 4.7 unweighted median multiple across its metros blew the Irish banks out of the water, how come the Australian and New Zealand ones are supposed to survive 5.9 and 5.8 respectively ?

    Following the bust, the Central Bank of Ireland found in subsequent research, it was high income multiple lending (more so than high loan to value lending) that did the most damage to the Irish Banks … and it imposed a general lending cap of 3.5 times gross annual household incomes.

    A year earlier the Bank of England had capped at 4.5 times.

    In normal housing markets house prices should not exceed 3.0 times annual household income, requiring sensible mortgage loads of about 2.5 times (Demographia Survey ).

    Prof Bill Black & others discussing the Irish financial system performance may be of interest … Youtube

    • COVER STORY Family home in cities soaring further out of reach … Newsweekly Australia

      by Chris McCormack

      News Weekly, March 10, 2018

      Australia has no affordable housing markets, according to the Demographia International Housing Affordability Survey: 2018.

      The 14th annual Demographia survey measured 293 international housing markets’ affordability in the third quarter of 2017 (the 2017 survey measured 406 markets at the end of the third quarter of 2016) and ranked them according to a median multiple (MM): that is, the median house price divided by median household income – with a score of 3.0 or below being affordable and 5.1 and over being severely unaffordable. The number represents how many years of pre-tax income would need to be earned to pay for a house. … read more via hyperlink above …

  10. Bears mentioning that, like in the USA, a lot of this comes down to the moral hazard created when the initiator of a loan is not responsible for funding the loan. It’s pretty easy to write a terrible loan if you’re not the one who wears it on a default.

    Banks, in many cases, are just middle men, not much different to brokers. They hit the money markets and effectively connect a foreign lender to a local borrower, collecting commission and ongoing servicer fees. The local borrower thinks they took a loan from Bank X, but really they’re borrowing from a Norwegian pension fund.

    Depending on how the deal is structured, the intermediary can create a firewall that shields it from a default. Systemic fraud follows as surely as night following day.

  11. Ajaydee73MEMBER

    The solution to sloppy lending is even sloppier lending. Then these irresponsible borrowers who can’t pay their loans can sell to even less responsible borrowers. This will cause property prices to go up, which will increase equity of current property owners, who can use the equity to lever into their 2nd, 3rd, 8th, 10th property.