Brace for mass mortgage defaults

According to the latest mortgage deferral data from the Australian Bankers Association (ABA), repayments on nearly 500,000 mortgages have been deferred for six month, totaling $175.6 billion:

That equates to an average mortgage size of $350,000 that has had repayments deferred by Australia’s banks.

On Tuesday, comparison site Mozo warned that many mortgage holders could be forced to sell their homes once mortgage repayment holidays and emergency income support ends:

Almost half of all homeowners (43 per cent) will struggle to meet their loan repayments after their JobKeeper payments end, according to Mozo.

And, with the Australian Banking Association reporting that $175.5 billion in loans has been paused due to Covid-19 hardship, that means the potential default figure could be up to a whopping $75 billion.

“As a nation of mortgage holders we look set to walk off a financial cliff when government and industry support programs end,” Mozo spokesperson Tom Godfrey said.

“With many Australians finding themselves out of work and many more having to accept reduced hours, JobKeeper and the banks’ mortgage holidays are critical in ensuring people can stay in their homes.”

The research also found 53 per cent of mortgage holders were worried they could be forced to sell their home if they’re unable to meet their repayments in six months.

What’s more, 38 per cent of Aussies on JobKeeper said the payment wasn’t enough to cover their current bills, let alone when the payments would end in September.

“It’s clear the Federal Government’s JobKeeper payments are proving a vital lifeline for many paying down their home loans. But when these payments end and the banks’ eventually turn off the hardship support tap, the mortgage market could start to crumble,” Godfrey said.

The situation has obviously worsened now that Melbourne has been placed into another hard lockdown. Many small businesses are unlikely to survive, leaving owners financially ruined and driving-up unemployment.

The ABA has at least provided a glimmer of home, offering eligible customers a four month extension on their mortgage repayment holidays:

Customers with reduced incomes and ongoing financial difficulty due to COVID-19 will be contacted as they approach the end of their deferral period, to ensure that wherever possible they can return to repayments through a restructure or variation to their loan.

If these arrangements are not in place at the end of a six month deferral, customers will be eligible for an extension of their deferral for up to four months…

A deferral extension of up to four months will not be automatic, it will be provided to those who genuinely need some extra time. Many customers may need less than four months to either restructure their loan or get back into full repayments.

Banks will work with customers to find the best options to restructure or vary their loan.

Alongside probable extensions to JobSeeker and JobKeeper, the day of reckoning for mortgage holders can be delayed, but it cannot be avoided altogether.

I am still expecting a wave of forced sales and mortgage defaults towards the end of the year as Australia’s economic recovery falters.

Leith van Onselen

Comments

  1. Goldstandard1MEMBER

    -Unemployment is high and not lowering as economy can’t fully open.
    -no immigration (except a few cashed up crims from HK)
    -tightening bank credit
    -no FOMO

    therefore smart people will choose to sell before defaults come crashing in. But will they meet the market or join the default volumes?
    It’s a tough decision but the house of cards is falling now with ppl understanding the economy Is not opening.
    It will be a bloodbath now.

    • Cookie Cutter

      The RBA has already said that they will hide price results in a falling market. Failing that they’ll have a “circuit breaker” to prevent all sales in a falling market.

      The RBA will not let prices fall much.

      • DominicMEMBER

        It’s not in their power to keep the market propped up. The only way they could feasibly do it is to become buyer of last resort of all properties – which will never happen. And if it ever does, you’ll know that the end of the monetary system is mere months away.

      • ErmingtonPlumbingMEMBER

        They’ll engineer an inflationary breakout to prevent nominal prices falling to far.
        It’s not something the establishment wants to do but a UBI is preferable to them over asset price wipeouts.
        Why do you think all this talk about MMT has been directed at the plebs lately, as though it’s a new thing. All that funny money that’s been directed at Wall st and the Banks since 2009 is heading for Main St and I’m not talking about that trickle down BS either.
        It’s Gunna be KRudd $900 cheques paid Weekly forever brah!

    • Domain listings for sale have gone from 241,000 to 246,000 in less than two weeks.

      Rentals went from 90k at the start of Covid up to 98k a few weeks later – and are now down to 89k

      The take away is that people tried to rent out their properties – failed and are now listing them for sale. This trend has been happening for weeks and will continue.

      The crash is here.

      • That’s only a 2% rise in for sale listings. Not sure that is significant although it probably goes against the usual midwinter trend.

        • The Traveling Wilbur

          You just won’t fit in around here if you keep bringing logic and analytical thought to the party. On a pure bear pr0n page.

          🐻😁

          • It’s like bringing arborio rice to a prepper party. It might do the job, but for some reason it’s just not welcome.

      • Goldstandard1MEMBER

        Not from me!! But let’s face it, ppl got used to there literally “nothing” that could crash the market so I can understand in their resistance to reality. Now the over-leveraged burn.

        • It’s just interesting to see things play out
          It’s very interesting I’ve underestimated the pain and suffering
          It’s different seeing it with your own eyes compared to just theorising

          • PaperRooDogMEMBER

            Yes, pain has started for some, I saw a caravan someone appeared to be living in parked in the park near Sutherland swimming pool at the weekend. Sad to see this in Aus

          • It should never have been allowed to get to this

            GREED

            The greedy become the needy

          • Rorke's DriftMEMBER

            PaperRoo I know of someone who had a family holiday in their caravan whilst it was parked outside of their house. Didn’t mean they were homeless. Someone else I know took the kids camping in their backyard. Yes sad to see in Aust but may just reflect Covid travel restrictions rather than economic meltdown.

        • When I was younger I went to Sydney and played on a golf course I didn’t know and it had a dog leg shared joint fairway, I hit the ball aiming down the wrong fair way, I hooked the ball really badly but it ended up on the coreect hole and I got a birdy
          I still got the birdy
          The course was around northbridge on Syd lower north shore near neutral bay somewhere

          If you are correct you are correct

          • It’s only taken 8 years for the bears on here to be correct? Banks are already extending mortgage holidays and government will throw more kitchen sinks to save this bubble yet. Don’t count your chickens until they hatch…

          • @Nick Colins
            I have included a few assumptions in my analysis that no one uses

            One is increasing interest rates.., Nick I may be wrong …. I just haven’t been so far

            I’ve found that when you ars wrong from the start that continues

            When you get the first part correct tends to flow through

          • Ok and when exactly are interest rates going to rise? Personally I don’t see it happening for a very very long time.

        • PD if someone predicts the system is unstable and will collapse at the first trigger – and it does, bang on time – it doesn’t matter that they didn’t know the exact trigger in advance. They are still correct.

          • Professor DemographyMEMBER

            Pick any time in history and add this sort of rolling lockdown situation and consider if you would see a similar drop in things. I am enjoying the house price threat but to claim you got this call right is trash.

          • BCNich’s first call was correct back in March. The fact he didn’t know if the immediate cause would be COVID or some other shock is not relevant, it played out exactly as predicted.

            His second call – for a house price crash and a rise in interest rates – well it’s still too soon to tell. Stand by.

          • ^Clarification: he made the call in Sept 2019 for everything to turn to custard in March 2020 and was proven absolutely perfectly spot on correct.

          • Can’t remember. Ask him.

            I presume the logic is our banks are going to become risky as their loan books start to look shaky, so their borrowing costs will go up. Personally I think the RBA will step in and prevent this but he could well be right.

        • boomengineeringMEMBER

          Hey Professor,
          Was talking to a sheila at Manly last year giving spiel on whats ahead. went back to sit with the missus and the sheila walked past so the missus apologized for my C theories but she said no worries as her husband also ranted in that fashion and was used to it. Anyhow what I told her was that we were overdue for a pandemic, depression and war. Shes now probably wondering if my name was bcn.

        • billygoatMEMBER

          Covid is the mythical black swan event we had to have. 100% social engineering. Plenty of folk knew COVZiD was in the pipeline. Nana nana na bat flu biff pow bam bop thwack:)) Tav eye stick pile of BS social engineering. Everyone would know in their gut that house prices could not literally rise to the moon. Unless of course the world is populated by half wits in skin suits:)

      • truthisfashionable

        At a team meeting last week I mentioned the solar minimum stuff and a colleague was taken aback as their kids (private school) had been talking about it. Another colleague’s partner had also mentioned it.

        So either MB is frequented by a very wide reader age cohort, or the solar minimum stuff is enough for people to look curiously and cautiously.

      • ArasakaMEMBER

        First they ignore you, then they laugh at you, then they fight you, then you win. Looks like you are about at the last part.

        Always appreciate your posts bcnich. Unless they have travelled back in time, nobody knows how this is going to play out and your prognostications are as valid as any. For my sake I hope you are right!

        • I have quite a few assumptions and variables I include in my analysis that I’m not going to write on here

          One I’ll say is rising interest rates …. guess if I’m wrong I’ll cop it

          • “You will recognize them by their fruits.” But seriously, after what must be nearly a decade reading this blog here is my crazy prediction… in 18 months house prices will be pretty much where they are now and we will all still be here gnashing our teeth. Take that to the bank.

      • Jumping jack flash

        Yes that will be the clincher. Almost any IR move upwards will spell absolute carnage. Not to mention the credit crunch we currently seem to be at the start of.

        In my opinion we were sailing dangerously close to a so-called “Minsky Moment” for the past 7 years. The debt needed to grow much faster to prevent it. It didn’t. COVID obviously tipped us in. Now all thats left is the 30 years of debt deflation.

      • Why would interest rates rise?

        I understand banks will price risk accordingly, but that’s on a per-application and per-existing customer basis. Their headline rate shouldn’t rise, and it should still roughly track RBA movements.

        As far as I can tell the “rising interest rates” issue requires either the official cash rate to lift, or the big 4 to lift their headline rates. Lifting rates for individual borrowers – even if you do it for every borrower in distress and every new borrower who fits the criteria for increased risk – might fly under the media radar.

        • Jumping jack flash

          Risk has been hidden by expanding debt.
          IR are set according to risk.
          No expanding debt, risk is revealed, IR set to suit.

          There is a ton of risk.
          $1m mortgage on 2x90k incomes? Come on!
          Was only possible due to the expanding debt pushing up house prices to systematically improve LVRs.

          • ArasakaMEMBER

            I was skeptical on the IR rate rise part but I can see the reasoning now more clearly. Thanks for spelling it out. Interesting times ahead.

      • bolstroodMEMBER

        I hope you are correct on your IR call bcn.
        Would be nice to get some return on FI in bank.
        Also the Stars are not boding well for 2h 2020

  2. Serge UpwardsMEMBER

    Ha ha, do not worry, Domain to the rescue…………….don’t things usually break when you ‘snap’ them ?

    With only serious buyers in the market now, and few sellers, any new listings are being snapped up fast.

    https://www.domain.com.au/news/homes-are-selling-faster-than-last-year-in-sydney-melbourne-despite-bushfires-and-pandemic-domain-data-966942/?utm_campaign=strap-masthead&utm_source=smh&utm_medium=link&utm_content=pos5&ref=pos1

  3. I think the banks are saying look at us and how accommodative we are being and helping our customers.

    Behind the scenes I feel that those that get the 4 month extension will be getting a fairly hefty nudge to sell up, particularly those with IPs

  4. MountainGuinMEMBER

    Interesting but not suprising that banks are going down the path of more extensions. For anyone who borrowed up to their limits in recent years, even catching up on a 6 month deferral would be very hard if we returned to full employment and income levels soon. Recall that in the early years of a mortgage, payments are mainly addressing interest costs rather than reducing the principal.
    So the play is to trap these people in debt for years and maybe call in the default in say 10 years when houses and unit dont need to be sold off in huge numbers.
    Maybe better for individuals to consider defaulting now….?

  5. Segregate Victoria

    JobKeeper will be extended and mortgage repayments suspended for another 6 months. They won’t let any property speculator fail.

    • Yep is happening already..4 month extension to no mortgage paynents…How good is straya?? On Sunny Coast , property investers are raking in their lovely 2k a week ( in sone cases) Air BnB money and not paying a penny in mortgage..some serious buffers being built up!

    • Bear Bullwinkle

      Oh please lol. How far does $750 per week go to pay a million dollar mortgage? Are the banks public utilities or do they have shareholders who expect dividends?

    • The Penske FileMEMBER

      I agree that the banks will extend the holidays however at the fringes there will be no such mercy. Look at the securitised lenders such as Liberty, Pepper, La Trobe, Bluestone plus the myriad of private lenders who were pumping out well over $1B in settlements per month last year. These lenders have to pay the bond holders every month and have a large percentage of SE clients due to the mostly Low Doc nature of their books. I’ve seen one book cut where 30% of the clients had asked for a holiday and the holidays granted were only for 4 months. Private lenders will offer no such hope to the market as they flood it with residual stock sales and interestingly put contagion pressure on banks commercial books. Take the small time developer with a home loan and investment property at Westpac and a $5M development completing now funded privately. The private lender leans on the development by putting the client in administration…. there goes your home loan as the bank has to act. A sharper mind than mine has a theory and I like it. 1/3 of these borrowers with holidays are already cured and making payments. Maybe they didn’t even need them. Another 1/3 will muddle through this in and out of default etc. The last 1/3 will simply have to sell.

      • Won’t government step in directly via AOFM to support these lenders to provide extensions?
        I think they will need to, and if they need to, they will.

        • The Penske FileMEMBER

          Good point but my understanding is the government “cash for mortgage clunkers” program is for new tranches. The book that I saw had a lot of loans written in 2017 on it and already safely in the hands of someone’s super fund! Also, the government won’t buy private books.

  6. Display NameMEMBER

    I understand the drive to own your own home. My children are in their late twenties and want to buy. I have been saying hold, not now for a few years. But I cannot understand people taking on massive mortgages, particularly at this time. As an engineer the whole financial system currently looks like a mechano set constructed by a two year old. A patch work of [email protected]#kups. Central Banks do not appear to have any plan. Noone, particularly anyone with any wealth can face the consequences of a bad financial decision anymore. The creative destruction of capitalism has gone. I suspect it is inevitable that we will have some significant unintended consequences of endless low rates and constant central bank bail outs.A loss of faith in the system is probably the most obvious candidate.

    • DominicMEMBER

      CBs have no plan because participants in ponzi schemes never do. Once you go down the rabbit-hole the only end game is death. Just a matter of when.

    • alwaysanonMEMBER

      We’ve been renting for 15 years and are in a one bedroom highrise unit in Sydney’s inner west. With us both being here 24/7 working from home it has kind of broken us – as well as the scenes of the public housing tower lockdowns in Melbourne I don’t really want to be in a highrise anymore. I wanted to swap to renting a house (we are now off lease and it seems like the best time ever to be a renter) but the wife doesn’t want to go through all the trouble of moving twice and is putting her foot down. So we are seriously looking around to buy finally (I am 39 she’s 38 so it does sort of feel like time). We have a 50% deposit and kept both of our jobs so will be fine but I am sure that when we buy we’ll be ringing the bell at the top of the market having been idiots first waiting this long but then not the extra six months when it counts though 🙁

      • boomengineeringMEMBER

        Just tyre kick as long as you can occasionally low offers and remember the next one is always better than the one you missed out on.

  7. GlendaFMEMBER

    Offload all those pesky toxic loans into the SPV’s that the Govt and APRA have already put in place……then it’ll all be fine, just keep those price falls at no greater than 10%, nothing to see here….
    I however hope you guys are all right and it will all end here and get a fresh new start for the new generation to actually own a home.

    • A requirement is to build extra quality homes faster than we add extra people/families to need them.
      All this dollar talk avoids the basic physical issue.

  8. Houses on the south coast are very, very expensive and selling almost instantly. Could be true in other regional areas as well. Hard to know what’s driving it. Could be people escaping Sydney and their mortgage, wfh, etc.

      • Tend to think so too, but it’s really amazing. People are barely even asking the price. They just look around, go, “spacious house, nice garden, beach. I’ll take it.”

      • I think it could become a permanent thing. I wanted to go regional for ages for quality of life reasons. Once people see how much better their lives are and less stressed I think they will never want to go back.

        • kannigetMEMBER

          its not like it was 20+ years ago, the average coastal country town does have a few cafes that do a passable latte and smashed avocado sammich. Growing up in that environment I remember when the latest craze of a ‘cappacino” came to town and the local coffee shop was selling them like mad… Frothed milk on instant coffee….what luxury…

          • I’ve watched the food trends – from hot chips, to potato gems, to wedges, focaccias, to paninis, to pesto scrambled eggs to smashed avo.

  9. You can get new fixed term loans for 2.1% . This makes owning cheaper than renting for the average punter. Banks will just extend this rate to all customers who are in financial difficulty. Bloodbath won’t happen. Bank profits will be hit but not obliterated and gubbermint will support through extended JK any low rates.

    • Hadron CollisionMEMBER

      Bingo

      Currently renting after just selling.

      Trying to flush out a listing in area we’re in. Did the numbers, cheaper to buy with a 500k mortgage than rent. Taking into account maintenance rates etc etc etc

  10. In today’s Australian

    Australian Banking Association chief executive Anna Bligh said the new customer support package would be “specifically targeted to getting people back on repayments while continuing to help those hardest hit”.

    She said the new measures, including extending the length of loans, converting loans to interest only for a time and consolidating debt, would help customers “avoid a cliff in September”.

    “This new phase of support turns a cliff into manageable steps for Australians to get back on track and repaying their home loans and business loans,” Ms Bligh said. “Customers with reduced incomes and ongoing fin­ancial difficulty due to COVID-19 will be contacted as they approach the end of their six-month deferral period, to ensure that wherever possible they can return to repayments through a restructure or variation to their loan.”

    Ms Bligh said if arrangements could not be put in place by September, customers “will be eligible for an extension of their deferral of up to four months”.

    • I’m sure many lendees will be glad that Anna survived cancer.

      The warmth she radiates as a survivor is dazzling.

      Too harsh – I’m sorry she once cried on TV during the floods so all is always forgiven.

  11. mass defaults are not cause of property bubble crashes but rather the result of

    It’s the lack of buyers that only matters … It’s the psychology of buyers combined with credit availability

    if buyers who usually have no direct interests and bias toward price growth start thinking that in 6 months they can buy for 5%-10% less and save $100k we will see 70% crash even if none defaults in meanwhile

  12. PalimpsestMEMBER

    Anecdotally, the properties that seem to be holding price are those with a small garden area in SYD or a slightly bigger area outside the city zone. Also remember that some 70% of home owners have minimal debt. Anybody in that position that bought more than 10 or 15 years ago is in a reasonably comfortable position. So beachside properties with views will have plenty of buyers still. As for MLB, I’m not aware of any sector that’s healthy.

    • Also remember that some 70% of home owners have minimal debt. Anybody in that position that bought more than 10 or 15 years ago is in a reasonably comfortable position to sell at 10% or 20% or even 30% discount and still make money before prices fall 50% or 70%

      never underestimate 2 million of speculators in Australia who are mostly older and due to age have no interest to hold for another 10 years … especially knowing that rents are falling off the cliff and many properties staying vacant

  13. Selling ??? LOL to who
    I said last year 2019 Q4 was last opportunity to get out
    There won’t be any buyers next year

    If you are from Melb
    Get a 4WD campervan small pieces of gold
    Just pack up and leave

    • boomengineeringMEMBER

      Had an email from Central Coast agent trying to offload desperate clients property before listing. This is also what happens, they can’t afford the RE agents costs to be passed on especially auction cost when passed in.

        • Rikki StocksMEMBER

          Those tears should be collected and fermented to produce a late harvest wine that can be savoured by the younger generation. They will drink with deep gratitude, their futures saved from the voracious consumption by those that spawned them.

      • Reus's largeMEMBER

        2257 has summer levels of listings and everything that is selling is going for bottom of the asking price range or less, I have places that I am watching that last sold in late 2017 that are listed for what the sold for back then, will be interesting to see what they sell for now. Will keep you posted.

      • Yes I’m sorry
        It’s very hard to see the rest of AUST when you are locked in the southern communist state
        My views at this stage are solely based on Melb
        Sydney behind 2nd
        Other capitals so so not sure
        Regional and coastal very varied but some will go up

        The one I don’t know is Hobart
        I think that may take a belting too ????
        It went very high

        Anyone from Hobart ?????

        • I’m in Warrandyte area and Melbourne North East leafy burbs. Prices seem to be holding so far. Even further South in Ringwood, Templestowe, Park Orchards etc. Because you get bigger blocks and nature with it. I think they are good places to be during pandemic. I haven’t checked but I think prices are still up year on year. For now. I don’t know if it will change, but we shall see..

          • More inner metro Gav
            I grew up in DONVALE as a very young kid
            out there is semi regional
            I wouldn’t call down park Rd into park orchards S Warrandyte Melb metro

          • Arthur Schopenhauer

            It’s 2nd tier lender sites that will feel it first. GRZ2 zone, land for townhouses.

    • truthisfashionable

      “Get a 4WD campervan”
      Trying to convince the missus that a Mitsubishi Delica D5 is a cool car, a smallish offroad capable van seems perfect for longer quick-planned get aways.

  14. SoCalSurfCreeperMEMBER

    So the entire system is dependent on loan modifications. This is (controlled) default by another name. Basically, the mortgage banking system is on life support.

  15. happy valleyMEMBER

    And who will subsidise the accruing, unpaid interest and principal so that bank management and shareholders can get their handsome bonus and franked dividend feeds? Depositors, of course – get the KY jelly ready again.

    • banks don’t care about principals since they don’t own those mortgages anymore – sold it to RBA at 0.25% interest
      banks are now in no risk business

  16. SoCalSurfCreeperMEMBER

    The problem with this is there is no end game. No exit to this madness. So they are successful propping things up at 2% interest? Next time it will take 1.5% and then 1%. Eventually loan balances will become so large they can’t be paid off by a lifetime of earnings. So a lifetime of renting money from the bank?

  17. boomengineeringMEMBER

    Reply to bcn unable to post
    You’re talking to one that’s been through the mill. Akin to being dumped by a big wave then cmming up for air but only getting a egg cupful due to successive waves crashing in all too short intervals all the time wondering if that was the last breath.

  18. There absolutely will not be a crash. Let alone “forced sales” Everything that’s being done right now and will be done is actually making the likelihood of forced sales the lowest in a long time.

    This covid thing is the best thing that could’ve ever happened to Australian RE. But for it (and all the fiscal policies), there may have been a chance at stagnating prices. But now, that’s been saved by all the free money, mortgage holidays, extremely low mortgage rates etc. This stuff will continue indefinitely. Prices will be higher this time next year. Guaranteed. Minimum 10%-15%. People will be scratching their heads until they look back and see that it all made sense in hindsight.

    I’m not saying this because I want it to happen. I would be over the moon if there was a crash or falls of 20% and more. I’d love to see the RE industry, mortgage brokers, specufestors, greedy boomer property investors, Chinese criminal money launderers, absentee owners, high-rise harrys et al all burn to the ground where they belong. But, the sober reality of it is that it’s just not going to happen in the foreseeable future.

    Interest rates are going down. All the dead wood businesses that have no right to exist will be given a free ride. Negative official rate and negative deposit rates will happen in Australia.

    • Bear Bullwinkle

      Free money of $750 per week? It doesn’t get you far in the Sydney property market.

      Free money to buy a new build sh!tbox, which is fully absorbed by the developer?

      Where’s this free money to prop up the property market, when do I get mine?

      How does the existence of mortgage holidays imply 10-15% gains next year? Was there widespread use of mortgage holidays in bumper years like 2006 or whatever? Was the existence of welfare (JobKeeper) bullish in previous years?

      The sole silver lining is low interest rates. Bulls used to point to migration. It’s gone. Now there’s just low interest rates.

        • Bear Bullwinkle

          If they want to turn the Big 4 banks into the perennially on the brink of collapse banks that they have in Europe (and that’s with more diversified operations like investment banking), then they can go negative.

          It’ll just kick the can down the road a little bit further before the inevitable collapse. Aussies cannot afford housing, that’s what matters, not the interest rate. A -0.1% interest rate on a 2 million dollar mortgage still requires repayments that are too much for almost the entire population of Australia in the good times, never mind after this global recession.

          There’s no escape. You can’t perpetually pump property and constantly squash wages. Increasingly desperate gambits like importing the entirety of Hong Kong’s population as fake refugees are all that’s left for the Australian government.

          • Exactly, banks borrow os to fund our CAD so need a premium on rates. Bcn’s point is risk is rising and that will flow through rates from banks to resi borrowers.

    • You could be right, but if you’re not…..
      Lower interest rates; even negative ones are likely to extend the time for The Distressed have available to them to get out with what’s left of their shirts.
      The alternative, of debt being worthless in other words, is that the price that’s attached to any asset is meaningless.
      As I wrote last week – How much would you pay for a 1 bedroom unit in Mosman if interest rates were negative? $1,000,000? $10,000,000? $100,000,000? The dollar amount is irrelevant, and so property will be ‘worth’ everything and nothing at the same time (ie: Who’ll want to swap it for cash at any price?)

      • Bear Bullwinkle

        Even if interest rates were negative, most of us aren’t financial institutions that can borrow in lieu of cashflow. We still need to actually generate that income.

        I can’t pay $10M for a one-bedroom unit and neither can 99.9% of the Australian population.

        Even those who can pay that much will invariably have far better opportunities almost anywhere in the world.

    • Agree. It is not allowed to happen by government as long as ‘high property prices’ are sacred to a significant voting block (those that got their place cheap and want to downsize and cash in, or those that get off on the inflated wealth they ‘have’, or those that want higher prices to feed the ATM potential of their residence).

      Those interested in housing affordability are inconsequential voters or have given up (and don’t vote accordingly on the matter).

      GDP and high property prices are the sacred cows to governments of both stripes.

      Only when the boomers die off en masse and those seeking housing affordability become the voting majority (and vote accordingly on the matter) will the ‘high property price’ goal die off.

  19. Ulrike Meinhof

    Brace for mass mortgage defaults
    Do you have any idea just how stupid this statement is?
    Bracing for mass mortgage defaults, is the modern day equivalent to the Cold war era “Duck and Cover” exercises that some might remember from primary school
    https://www.youtube.com/watch?v=zMnKNHNfznE

    mass mortgage default = financial nuclear annihilation

    They are only consumers. We want nothing to do with these gossipmongers, for whom the anti-imperialist struggle is a coffee klatch. Many are those who don’t gossip, who have some understanding of resistance, who are pissed off enough to wish us luck, who support us because they know that there is no point spending life implicated in and adapted to this crap.

  20. kiwikarynMEMBER

    4 month extension of mortgage deferrals is simply giving the homeowner enough time to spruce their place up and get it on the market, and sold. Banks dont want the negative publicity of having to foreclose on these people, or the cost of managing foreclosures. But the hard word will be on those homeowners/investors now.

    • kannigetMEMBER

      Commonwealth offering $2k on loan re-financing… looks like an attempt to sure up the portfolio a bit…
      Any CBA customers would be crazy to refinance now, the valuation could come in way lower than they expect, put them in an untenable position and be forced to sell or topup the equity.
      Any customers from a different bank who qualify will be done so with a lot more scrutiny so should be good, but those that dont will regret the fact they tried as the sharing between the banks is now automatic and it may put their current loan in jeopardy….

  21. The thing I disagree with is that policy options are exhausted. I posted this list a few weeks ago…

    The RBA/ govt have plenty to throw at it before it’s done, bankrupting the country in the process. Off the top of my head:
    – Full super balance to pay mortgages/ house deposit
    – Further vendor stimulus eg. FHOG grants, homebuilder upped to $100k
    – Negative gearing for OOs
    – IO 10yr terms for all, deferred mortgages for years, 50yr intergenerational loans
    – Negative IRs
    – Pumping immigration and money laundering purchases to the moon from 2021
    – RBA buying all junk/ subprime loans (maybe already occurring)
    – Finally, direct govt/ RBA buying of property or mortgagee sales from banks

    (from a capitulated bear)

    • Ulrike Meinhof

      Is that all you’ve got?
      The problem we are seeing is fundamental to the structure of modern day Capitalism.
      Capital has no cost and therefore no value yet we charge people to “invent” more
      This Capital is not earned, there is no requirement what so ever that work is done in the creation of additional Capital, yet the masses continue to subjugate themselves simply to attain Capital.
      This is the end game, the elites have won the proletariat have bound themselves with the chains they willingly purchased.
      It is claimed the Lenin said
      “The Capitalists Will Sell Us the Rope with Which We Will Hang Them”
      Yet here we are the Capitalists are selling us chains (that cost them absolutely nothing to produce) while we the workers are making sure our chains are good an tight before we weld them shut.
      And yet you sit there and wonder why the Elites are still willing to Extend and Pretend. The game is up for everyone if they stop so they’ll continue for as long as we continue…and then some.

    • Agree with everything BM. (except neg gearing for OOs).

      Money to buy property in Australia is the cheapest it’s been ever. And, it will get cheaper.

      There’s so many factors that are positive. Another factor – a large proportion of Australians, typically the retired and almost retired generation, have excess wealth. They can’t spend it on 100k river cruises in Europe or other such travel.. they will be incentivised to increase their IP portfolios also. It’s the entitled greedy generation of strayan boomers that “worked hard” (as if nobody else does) for their wealth and they’re now chasing yield as their main priority in life.

  22. Leith,
    Given (a) the gov stimulus (Jobseeker/Jobkeeper) & (b) Banks mortgage repayment holidays/IO conversions etc could continue INDEFINITELY how exactly will we ever see a SINGLE default (if any)?
    Thanks
    Jeff

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