Gottiboff: Royal commission to land on builders

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Via Goittiboff:

I have been in touch with two of the top five non-apartment builders in Australia and neither realised that the Royal Commission was threatening to go after the banks over unfair lending practices if they keep lending to homebuyers on the basis of false living expense estimates.

…Both builders explained that the majority of the outer suburban and rural houses they sell are funded on loans that represent 95 per cent of the value of the property. To get to that level the brokers and the banks sometimes turned a blind eye to income boosts while almost all loans have low estimate of borrower living expenses. In Victoria this has created huge outer suburban/rural demand and the price of land has risen by up to 50 per cent in some areas which is boosting the cost of dwellings.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.