Kenneth Hayne clears 2023 diary as Frydenprime arrives

If you want a prime example of why Australia is the property equivalent of a narco state, read on below.

We are only around 18 months out from the Kenneth Hayne banking royal commission, which lambasted Australia’s banks for irresponsible lending. Yet Treasurer Josh Frydenberg has amazingly announced the scrapping of responsible lending laws:

Responsible lending laws that fuelled a bitter court fight between the corporate regulator and Westpac will be scrapped for banks, which will be subject to less onerous credit rules to encourage the flow of loans and boost the economic recovery from the COVID-19 recession.

In a shift from “lender beware” back towards traditional “borrower beware”, Treasurer Josh Frydenberg will on Friday announce the government will in effect dump the responsible lending law that was imposed by the Rudd Labor government in 2009 following the American subprime loan crisis…

The deregulation responds to concerns of banks and Reserve Bank of Australia governor Philip Lowe, that following the Hayne banking royal commission and ASIC’s pursuit of Westpac in the “shiraz and wagyu” lending case, banks became too conservative and squeezed the flow of credit…

Greater emphasis on self-responsibility means lenders will not be penalised if borrowers mislead on their loan applications, enabling banks to rely on income and expense information provided by borrowers and speeding up the credit approval process.

More here:

The major banks have won the argument that responsible lending has squeezed access to credit, with the Morrison government set to change the rules 18 months after Royal Commissioner Kenneth Hayne implored the financial services industry to “apply the law as it stands”…

The Hayne royal commission castigated the banks for the allegedly widespread practice of what law firm Herbert Smith Freehills has called “credit-mash”, whereby processes of inquiry and verification were combined into a single assessment process.

It also took issue with reliance on the so-called Household Expenditure Measure (HEM) as a substitute for proper inquiry…

Coalition MPs including joint parliamentary committee on corporations and financial services chairman James Paterson had blasted the responsible lending regime as “confusing for consumers” and criticised ASIC’s guidance to the market.

We’ve obviously been negative on Australian property in 2020 and 2021 due primarily to:

  • Collapsing immigration and rising supply;
  • High unemployment; and
  • Falling incomes as emergency policy support is unwound.

We’ve also argued that with mortgage rates now at rock bottom, any further rise in property values would have to come from income growth (other things equal).

However, with banks now permitted to lend to anything with a pulse, who knows? The sky could be the limit with the Aussie property market engulfed into a giant sub-prime bubble.

If you want proof that Australia’s economic managers are really just bubble managers, here is your smoking gun.

This is a watershed moment in Australian banking and property history.

Unconventional Economist
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Comments

  1. Not only do we need a smoking gun, but a large, open ditch to let the bodies fall into. FFS Australia, is this the best we can do?!?

  2. Arthur Schopenhauer

    Out of all the possible policies to assist Australia through the first pandemic in 100 years, with a fascist state flexing its power on our doorstep and our strongest ally in disarray, they go with the very worst tactical and strategic choice.

    What a bunch of turds.

    What a bunch of smelly, duplicitous turds.

    Cretins, the lot of them.

    • Why do you say that? Bigger loans means more money in the hands of the marginal group of buyers = higher prices to maintain bank capital = more demand to soak up the forced sales… In terms of achieving the objectives of who really run this country it is the perfect solution.

      • Arthur Schopenhauer

        Oh, I don’t know, something about the winds of history signaling a coming storm.

        (Yes, from their limited perspective, it an obvious play.)

    • happy valleyMEMBER

      +1,000 Now which of the big 4 will be the first to go belly up from irresponsible lending next year?

      • None will. They are all guaranteed. This is why they lend irresponsibly, they don’t wear actual commercial risk from bed lending.

        • happy valleyMEMBER

          The guarantee is worthless (capped at $20bn per bank), but what they can rely on is depositor bail-in – it’s baked in.

        • Depositors are alright and so, I think, are foreign investors (lenders to our banks). Shareholders are the most exposed here. Any bailout from Gubmint is likely to see shareholders take a big haircut – to both capital and dividend. In fact the dividend is likely to stopped for several years I suspect while the bank rebuilds its capital base.

        • Yeah didn’t Gillard sign off on bank bail ins just in case shit happened…they were anticipating black swan & got Covid 19 the crown disease…in form of plan demonic … gold… guess it’s the savers for pie in the face.. Monopoly money … collect $200 as you pass go

    • I think we need to clarify something here: Josh is giving the banks the option to lend more — whether they will or not is another thing entirely. Bad loans cause real losses for the lender and shareholders.

      • But think of all the money they will save when they sack their lending departments, and start approving loans online in 5 seconds. Huge efficiencies to be gained!

      • “Will they lend more?

        Hell yeah. Front line staff have weekly monthly targets to hit. Brokers have quarterly bonuses to achieve, so yes, they will lend.

        Greed is good.

  3. That’s what the government is doing.
    Now its up to the citizens not to participate in this economic suicide..I still have hope

    • darklydrawlMEMBER

      And the banks too. Don’t get me wrong – those banks are no angels would take money off your children and grandma if they could profit from it, but holding a massive tranche of loans of unknown risk that could bring down shareholder profits (or worse, personal bonuses) is not an attractive proposition for them. I suspect they will do it and try the US approach and bundle as many as possible into RBMS type instruments and sell them off ASAP to some other sucker. Dunno. Will have to wait and see.

      • happy valleyMEMBER

        The bankers have just been given a licence to recommence committing heinous crimes. No care, no responsibility is now the rule for bankers – pass the Cristal and caviar.

      • They can flog the RMBS off to superfunds, so people can lose their homes, bank deposits, dividend income, and their retirement savings in one fell swoop.

        • darklydrawlMEMBER

          Hah. That was my first thought too KiwiKaryn. I shouldn’t laugh as there is a non zero chance that is exactly how it will play out!

      • Narcostate stuff. I am going to go ahead and guess you have never seen tanks rolling down your street, spotlights lighting up the front porch and firing directly into the neighbors house?

        Yeah it lowers the threshold for the due diligence and subsequent security of the banks – but the hyperbole is so effluent its hard to stomach.

        Reality is that this will allow those with incomes who qualify for loans to get loans – despite the reality of their personal expenditure. Once within the confines of that loan and its repayment schedule they are required to repay and will – or will be foreclosed upon.

        There is no lending to unqualified borrowers. If they have lied and can not repay – they are foreclosed on. The ONLY real impact on the system is a lowering of consumer demand through over stretched buyers.

        How does this effect housing demand with respect to the Covid Depression – in reality it does nothing. Being unemployed will not get you a loan. Lying about your income to get a loan – will just raise a debt notice.

        Like everything else this government does it is tyre kicking, tinkering around the edges – arms folded, eyebrows raised, staring at each other wondering what to do as they poke the dead, fly blown horse with a stick.

        ..

        • “enabling banks to rely on income and expense information provided by borrowers and speeding up the credit approval process.”
          Of course people will now lie about their incomes and expenses on their application, because banks are no longer required to actually check them. Welcome to the NINJA loan.

      • don’t worry immigration will resume its steady upward momentum very soon as well……Australia is not overpopulated, “full” or “dwelling dense” by any means I’m afraid. And infrastructure build can be quickly accelerated too.

        • That’s how I see it. Lower standards and defer foreclosures until the gates can be lowered again. In the meanwhile prices might pull back 10-15% (particularly Melbourne).
          Whether this works really hinges on how quickly they can get warm bodies into the country. Wages and employment will remain weak, but it won’t matter with rates and lending standards so low.

          If immigration is delayed then expect negative rates and other abhorrent policies next year. Anything to keep the bubble going.

          • i’m afraid there’s just no more global pop. growth and very limited global migration (maybe none). Your treasonous wishes will not be heard.

      • Calm down mate – as if its “total destruction of responsible lending” – like seriously take a deep breath. It will expand the supply of credit to those who can repay but stretched to the absolute limit. It does not supply credit to those who can not repay – yes it lacks responsibility in the longer term and will result in a worse financial crisis later and leave a trail of broken homes – but its impact will be negligible outside of harming the banking systems integrity particularly on foreign lending markets which we have since moved away from with internal lending the way forward.

        Opening up Super would be worth the hyperbole – this aint.

        • Well, I’ve always said the liberal party mantra to the denizens is ” Wealth through borrowing not Wealth Through Working” . Australians don’t work harder than any other countries citizens…but we definitely borrow harder, but I guess that’s all you can do when you don’t make anything.

        • You’re missing the gravity of this decision. Many of us here were hoping this economic conniption we’re having might have been the opportunity to restructure Australia back into something resembling a real economy. That hope has been trashed with this decision.

          • The tactics used before the final implosion will seem even more confounding, absurd or ridiculous. But they are more shill and may only appeal to the psychology.

            These tricks won’t work !!

          • Plus many.
            This is clearly why Leith and David get out of bed in the morning, in the hope that Australia might one day wake up to itself and see the consequences of this misallocation of economic effort and unanimously decide to reform on solid economic principals that will strengthen and guide this country in the long term.

        • How much do you feel you can borrow?

          Just sign here to say you understand you’re responsible for answering the question correctly.


          Most people don’t really know what a percentage is, let alone how an interest rate works, or that a comparison rate is how much they’re going to be paying (they think it’s the interest rate of all loans on the market or similar).

          Next up will be APRA dropping the assessment rate to 0.5% above the interest rate (which could be still below the comparison rate they’re paying).

          Agree the narco state comment is relevant.

          • darklydrawlMEMBER

            The most frequent comment I hear from people who are in a spot of bother with their repayments is along the lines of “I don’t understand how it all went bad – the bank wouldn’t have let us borrow that much if they thought we couldn’t handle it”. The bank of course, blames the customer saying they followed procedure and set the loan amount based on what the client put in the application. Lair loans were rampant until the RC shut them down. Looks like they’re back baby. BACK!!

        • > It will expand the supply of credit to those who can repay but stretched to the absolute limit.

          That doesn’t make sense. If you’re stretched to your limit you ability to repay extra debt is non existent.

          • Jumping jack flash

            Repayment takes care of itself when the debt is rolled over to the next debt patsy.

            The only thing that matters is some ability to service it, at the very least the interest.

      • Jumping jack flash

        “Total destruction of responsible lending, no.”

        Simply lowering the debt eligibility bar.
        The only thing that matters is debt eligibility in the New Economy.

        Debt eligibility has a finite number of parameters that can be modified. The main ones are income and serviceability. Although, none of the parameters are really important in the scheme of things if the debt is increasing at the correct rate to make everything work. I think of them more as boxes to tick or hoops to jump through.

        Income can be modified by using grants and ubi/jobkeeperseeker, etc.
        Serviceability can be modified using interest rate cuts.
        There are other ways of course.

        Then this kind of thing modifies the very foundational rules around income and serviceability requirements.

        But it is all related to eligibility.

      • The Traveling Wilbur

        I’m stunned they’re surprised. Gobsmacked actually. But that they are explains much of what has (and hasn’t) been written here for the last couple of years.

        I am surprised the LNP were so upfront about this particular one. Thought they would have tried stuffing it in through the backdoor, as per usual, to save face.

  4. So is this MB finally admitting that they got it wrong?

    “However, with banks now permitted to lend to anything with a pulse, who knows? The sky could be the limit.”

        • The Traveling Wilbur

          Yep, in a sad kind of way, it is amazing in’it?

          There are none so blind as those that will not see…

          To be fair, everything does look kind of blury to many on this blog. Especially when you’re a bug and a windscreen has just gone through your 4ss and you still haven’t worked out what’s happening.

      • The logic defying financial actions by the government 18 months after the Royal commission…

        It’s a staggering act of economic destruction.

    • Yeah, cause this policy was totally foreseeable. Your comment makes as much sense as lambasting someone for calling property price rises in December 2019 before COVID hit.

      This is the policy equivalent of a ‘black swan’. Nobody saw this coming, otherwise we would have read rumours about it.

      I’m still negative on property in 2021. But after that, who knows. Immigration and easy credit might arrive in tandum.

      • what are you talking about

        p3achy and I have been saying for years that this would happen

        It was as predictable as the sun rising

        • YOu need to stop crowing – this will do 4/5ths of fk all mate.

          Its borderline meaningless despite the hand wringing from Leith et al.

          • it will do more than that

            especially when combined with the upcoming tax cuts

            Plus UBI, government underwriting loans etc that is all in the pipeline

          • Meh. It’s got to get through the senate yet. And even if it does there’s the issue with demand.

            It’s fantastically stupid policy but the headwinds for property in Syd and Melb remain enormous while immigration cant come back. And it can’t for years.

            Then, even if it does work, what happens in 18 months when there’s no work, falling wages and property is beyond everybody?

            Even more irresponsible lending? There is an end point to all ponzi scehemes and we are almost there.

  5. so can we confirm MB now need to change their outlook to property boom for the next 10 years instead of property pain? This is opening the lending flood gates, immigration will be next (India to replace china). All of which results in property boom times.

    • Flood gates wont be opened until there is a vaccine – Morrison would lose his leadership in a heart beat.

      Secondly China is a country with a middle class now rivaling the USA – India has a middle class rivaling Venezuela. The desire to compare these countries because they both have large populations is laughable.

      India is a total basket case.

      • happy valleyMEMBER

        Morrison being the ultimate spin merchant will do a Donald and say what a wonderful job he has done.

      • PaperRooDogMEMBER

        maybe so, bruit that’s stall enough Indians with fake paperwork showing secondary income to move the market. Especially if the resident Chinese also start getting the fake paperwork from China again, I’d think.

        • David, serious question (and now for something different…). Isn’t there misdirection here? The “problem” the government has is that lots of businesses don’t know how they are going to pay the bills in the next six months and when they, ie businesses, go to their banks for support the banks are knocking them back. The SME guarantee scheme is supposed to address that but the first tranche of that scheme, which ends next week, failed badly, with only $1.7b of the $40b of the pool being lent out. And there is concerns that the second, expanded and extended, tranche also appears to have the wobbles.

          The issue the government is attempting to address with this decision seems to be that the banks are simply refusing to lend money to businesses (as the banks know what will happen when all the government scaffolding is removed from the business sector). It seems likely that the banks have been telling the government that the only way they will lend money to businesses is if the business owners go back to borrowing against their properties. But this decision by the government does not address “the problem”. All those businesses are still going to go broke in the next six months, this decision just means that the banks will have residential property as collateral for any loans they gave to failing businesses. To me, “the problem” lies unaddressed let alone unresolved by this decision.

          PS the Treasury Secretary recently said that it is all about “jobs, jobs, jobs”. Creating some work in the residential construction sector helps but the main game will be to prevent hundreds of thousands of businesses closing down.

      • “India is a total basket case”

        So is China – now teetering on the edge of food shortages to rival The Great Leap Forward 60 years ago.

    • Looks like we are back to 18 months to two years

      Same as it’s been for the last ten.

      I had real hopes for March. They are now dashed.

    • Rubbish. As DLS says, “there is an end point to all ponzi scehemes and we are almost there.”

      If the immigration can is kicked for the last time it may prolong the inevitable, but that’s all.

      The massive disappointment is that with this totally corrupted and unexpected policy change we’ve lost the last vestige of a chance to change economic course.

      “Round the decay
      ….boundless and bare
      The lone and level sands stretch far away.”

      200 years is all it took

  6. Cant fight this, they powers to be want people mortgaged up and with the white picket fence dream, when they have you in, your will never vote them out…

  7. Arthur Schopenhauer

    The word in German is Selbstvernichtung. In this context, the act of a state annihilating itself. It has a subtly bitter overtone.

  8. Jumping jack flash

    “We are only around 18 months out from the Kenneth Hayne banking royal commission”

    was there an RC? Would never have guessed. Hope it didn’t cost too much…

    “However, with banks now permitted to lend to anything with a pulse”

    Yes!! Its about time. The debt economy needs more debt to feed the beast. This should fix that eligibility problem that was preventing the debt from growing fast enough.. or so I thought.

    From an article I read this morning on the train, we apparently lend/lent out 13 billion a month to Quiet Australians, plus 5 billion to investors, for mortgages. I’m not sure of the period used for that figure, but at face value that’s around 200 billion a year which more than covers the 100 billion of interest payable on the giant private debt wad we all share.

    So why isn’t the economy accelerating to new highs?

    I suppose this is the quandary that has perplexed the RBA.

    Is it because of the principal repayments? If it is, then that problem should be nicely fixed by COVID.

  9. One can only assume business lending should be to the same standard? No DD required, just a bit of cashflow info and, “OK, here’s your half mill, go open “Delux Beard and Brew Nail Restoration Gallery and Cold Pressed Coffee Boutique” in your $78k p.a. alleyway converted garage with upcycled pallet furnishings and 1950s floor mats. I’m sure the local vibrancy is all you need to survive.

    • Jumping jack flash

      Nah, too much risk.

      The thing about lending increasingly huge piles of debt for houses which push prices up is that there is ZERO risk. The increased prices as a result of the larger debt piles being attached, coupled with our novel valuation system that simply takes the most recent, highest, sell price as the new value of everything around it (more or less), improves the only measure of risk used – LVR.

      As long as the next wave of borrowers are eligible for the new, correctly-sized piles of debt to make the whole thing work, then everything is fine. The key is debt eligibility, and this new decree effectively solves it, at least for the time being.

    • Shades of MessinaMEMBER

      As long as the underlying collateral is your house of course.

      And what do you know, it just went up by $500k !. Whack a doo !

    • Lol Geordie, there IS one of those in the same arcade as my retail store.

      They are doing so well they are hiring another beard trimmer this month.

      • Verse 3 of Spiritualized’s ‘Come Together’ might actually be a better fit.
        https://youtu.be/DUWA1b_9Gg4
        So little J’s a f***ed up boy
        Who dulled the pain but killed the joy
        And little J’s a f***in’ mess
        But when he’s offered, just says yes
        Little J is sad and f***ed
        First, he jumped and then he looked
        The tracks of time, those tracks of mine
        Little J is occupied

    • nice one…anything to avoid The Fall. 😉

      https://www.youtube.com/watch?v=ZJ7sPS4yYvE

      Take this invitation
      Bishop’s Queen to Pawn
      All of us were taken
      All that was, is gone
      Of this information
      Shames us, one and all
      Where’s my compensation
      Watching others fall
      Welcome to the fall
      Everything is useless
      Nothing works at all
      Nothing ever matters
      Welcome to the fall

  10. It’s not ‘lender beware’ or ‘borrower beware’. Responsible lending law exists to protect the government who have promised to bail out banks who are ‘too big to fail’.

  11. Folks, I am now old and as impotent as Hayne’s Royal Commission into banking. But if I can give you just one advice, it would be this: don’t wait for the sky to fall on your heads. Borrow now as much as the Bank allows and make a generous offer to secure your dream home. It does not matter what you pay today, it won’t make a difference in a decade or two.
    Told you so…

  12. But he is scrapping something that never existed anyway. They never actually restricted lending. They are still lending 7-9x income to anyone and don’t really do the proper expenditure measure anyway. I got pre approval both before and after the RC to see if it made a difference even when I added an extra $20k/yr expenditure and a baby after the RC. It didn’t and never expected that it would. They take your best case income in the best possible economic environment and times it by 7-9 depending on the bank. Always have and always will until a bank needs a bailout.

    • Jumping jack flash

      The key is the growth rate of the debt.

      instead of 7 – 9, we need 10 to 14. To enable that the eligibility rules need to be massaged.

      • With wages going nowhere or down that is exactly what they need to do.
        Since the RC they have dropped the rates 1.25% which does not give enough borrowing power (difference only $4k/year average on repayments). The big difference will be bumping that 9x LTI to 10x LTI to give you that extra $100k boost.

        Here is a little fun fact; from a 9x to 10x LTI on $100k income would be the equivalent of the person taking out the 9x LTI and interest rates going up 1%. This particular person (which is typical) who has bough a new apartment at 9xLTI is spending 65% of their take home pay on housing. If this persons income drops to $75k due to economic reason, after housing and living they will have nothing left. That’s the minimal threshold.

    • Possibly the only sane comment in this thread.

      Reality is, how much can you lend to an unemployed person – answer is still zero.

      Everyone is unemployed – until that changes house prices to collapse.

      If the government announced they were going to build a fast train around the entire country employing every single unemployed person on $300k – then start worrying – until then – nothing is going to happen except collapse.

      • You need to think a little deeper.

        Let’s say pre-COVID you had zero dollars for a deposit. Between all the govt grants and super early release you can now get your hands on $50k no questions asked. You can then go and get a loan at astonishingly cheap rates that are about to get cheaper. And now the banks have been given the green light to redline the system with impunity.

        This will pull plenty of new demand into the market. Sure, it won’t mean that unemployed people will get loans. But it doesn’t have to. It just has to offset the foreign bid and the coming distressed sales.

      • Jumping jack flash

        “Reality is, how much can you lend to an unemployed person – answer is still zero.”

        This never used to be the case. Back in 2002, while the New Economy was still in its infancy, the first couple out of my group of friends, all unemployed hippies at the time, bought their first house, and after a small contribution from their slightly wealthier hippy parents, were able to obtain the 80K from the bank to buy the property. Nothing fancy, but not a single job in sight, and a couple of kids as well.

        Perhaps we will see a return of this?

      • I am still yet to see a broader market collapse in the employment sector for high paying white collar workers outside the hard hit sectors of retail, entertainment and travel/tourism. I think its coming though.

        • I’ve seen analysis that to date employment in the construction sector has been relatively unaffected but that was likely to change drastically in the next six months if nothing extra was done. And of course residential construction has a faster reaction time than commercial and infrastructure construction so expect the government to do stuff (like what they’ve just done). From memory construction is the fourth biggest driect employer so the government will feel the need to address this.

  13. FUDINTHENUDMEMBER

    They should make getting jobseeker contingent on getting a massive mortgage! That will fix teh thing! Go Straya!

  14. Is there anyway Australia can apply somewhere to be removed as a country and reclassified as a real estate development jurisdiction.

  15. We’ve had both RBA and Treasury effectively &#$% their pants this week.

    & the storm hasn’t hit yet.

  16. “Greater emphasis on self-responsibility means lenders will not be penalised if borrowers mislead on their loan applications, enabling banks to rely on income and expense information provided by borrowers and speeding up the credit approval process.”

    So basically, liar loans are OK. I’m just shaking my head in disbelief at this point.

      • Mining BoganMEMBER

        I regularly think it’s the people that sh!t me more. The LNP can’t help being corrupt. It’s who they are. But social media this morning with the average Joe cheering this on to save their ‘investments’ got my blood pressure up. They don’t care one bit about their country and are willing to destroy it.

        Well so am I. The place has to burn to the ground. C’mon WuFlu, do your magic for me.

  17. “In a shift from “lender beware” back towards traditional “borrower beware”, Treasurer Josh Frydenberg will on Friday announce the government will in effect dump the responsible lending law that was imposed by the Rudd Labor government in 2009 following the American subprime loan crisis…”

    This is just stupid from the government. No-one believes that “borrower beware” is actually a thing. Borrowers borrow as much as the bank will lend them. And if they can lie about it, and the bank won’t get in trouble, then the bank has every incentive to just hand out money willy-nilly. If the liar loan gets discovered, well, only the borrower will get in trouble for it.

    Incentives have been distorted, result is inevitable.

    • happy valleyMEMBER

      Yep and with their mortgage broker prepared to tell whatever porky (as they traditionally have) the potential borrower needs and the banks just taking as a given whatever the broker tells them (because the brokers are de facto writing the loans for the banks – apparently, at least 50% in some cases), it won’t be long before the banks’ books are 100% more full with dud loans than they already have.

    • PaperRooDogMEMBER

      Yes. Borrower beware only works when housing is a commodity, a cost of living then it makes sense to for borrowers to beware brunt housing is now an investment to borrowers are incentivised to borrow as munch as possible, else you joust aren’t keeping up with the Jonses let alone the Wangs, Guptas & others with their dodgy overseas income claims.

  18. Serves Hayne right for refusing to smile at that
    PhotoOp with Joshy.

    Hayne is now a two time loser on responsible lending. He thought that ASIC should have won the wagyu and Shiraz case but then said if they lost, the law should be strengthened.

    Not only did ASIC lose, the law has now been weakened!

    • He didn’t smile and was smug enough to think the rule of law and the RC recommendations are stronger than politicians and their sneaky ways…dreamer!

  19. happy valleyMEMBER

    ScoMo did apparently, vote 26 times against holding a Royal Commission in to the Financial Service Industry – so this is now payback time for it ever having occurred on an LNP watch and to destroy any value of it?

  20. Woo-Hoo! Unleash the animal instincts and leverage up into some new IPs. Never been a better time to buy.

  21. Its a confession of failure by the government and RBA. If the only thing they can do is allow banks to write monstrous high risk loans to people who cannot afford it while immunizing the banks from the risk with RBA backstops then its game over folks. Accessing credit was never the problem, never has been. The RC proved this.

    Its the ability to pay which will cause the bed to be sh#t. Banks will expect repayments, banks will expect bigger repayments on bigger loans. Repayments were hard pre-covid for a large chunk, they will be even harder for a larger chunk servicing more debt with higher risk to incomes.

    Fools will rush in, fools will get taken to the cleaners. Some will do well out of this but for the main the average debt laden punter will struggle.

    Just before one of the big 4 defaults Josh and/or SFM will retire, they will want to spend “more time with family after the stresses of COVID”. 2-4 weeks later, a bank will go to the wall.

    • happy valleyMEMBER

      You’ve called it right. The only alternative and totally feasible under this LNP government’s principles is for them to legislate that bank loans never have to be repaid (and what’s so silly about that, because in substance they never are repaid any more).

    • Mate, you are not thinking laterally. Bring on 40 year IO mortgages and the repayment problem is solved. And NONE of the big 4 will go to the wall if the RBA and govt can help it. The whole system will fail if that happens.

  22. “Josh Frydenberg has suggested the government’s changes to responsible lending laws will not apply upward pressure on house prices, despite more people getting access to loans.

    “I actually didn’t say it would have a direct impact on house prices. But, for first home borrowers and people seeking a mortgage, this will increase their access to credit,” the Treasurer said.”

    Shameless.

    • Mining BoganMEMBER

      Got to get the young’uns in to bail out the oldies.

      There’s more than one was to fiddle a kiddie.

    • happy valleyMEMBER

      Not our Josh – he’s got an ego on him (not quite as big as SFM’s) bigger than Port Phillip Bay and works on the principle of every LNPer that their sh.t doesn’t stink.

  23. happy valleyMEMBER

    I’d hate to think about the number of serious cases of tongue rash there would be among senior bankers today.

  24. Do you really think shareholders want the banks to lend to anyone?
    Smart one’s no.
    But Low risk mum and dad investors will hopefully continue to be so f kn stupid and just clap until the bus hits the wall.

  25. I love how they want to loosen standards and lend more while 430,000 loans are on deferred hardship payment.
    So basically you walk into the bank, say your on Job Keeper, sign and get $500k, then tell them you can’t pay it, get approved for deferred payments

  26. Hayne makes a man take things over
    Hayne lets him loose, hard to swallow
    Hayne puts you there where things are hollow (Hayne)
    Hayne, it’s not your brain, it’s just the flame
    That burns your change to keep you insane (Hayne)

    • I know that some of you don’t understand
      Milk blood to keep from running out
      I’ve seen the needle and the damage done
      A little part of it in everyone
      But every junkie’s like a settin’ sun

    • happy valleyMEMBER

      No, there’s the enormous downside as soon depositors will be bailed in when all the new irresponsible lending SHTF. The gubmint deposit guarantee is worthless and I’ll have to seriously look at moving money in to gubmint bonds.

  27. macaroni jewelerMEMBER

    An early election is in the air methinks.
    I would put money down that we will have voted by this time next year…. Spruik the economy, Stimulus for all and sundry then let the whole fucking mess implode Q4 2021-2022.

  28. “If you want proof that Australia’s economic managers are really just bubble managers, here is your smoking gun.”

    When you add in the new proposed rules for allowing stock-brokers to act on behalf of clients under cover of anonymity – and the already in place rules whereby real estate agents and lawyers are free from Austrac, it’s ‘pop the champagne corks’ for the ‘dirty money’ set. Ah, long live our convict and bent administrator culture!

  29. TBH no different to the infinite liquidity provided to equities for years now…..and with more still to come….only fair property gets it’s piece….no?

  30. Where’s the ALP response to the lunacy?! Is the most uncharismatic Shadow Treasurer actually taking the fight to our L Plate Treasurer showing what madness the government is wanting? Like him or loathe him at least Chris Bowen has a bit of mongrel in him.

    • Funnily enough, I just ran into Chris Bowen in Oporto’s Nowra. Would have asked him about responsible lending if we both didn’t have our kids around.

  31. happy valleyMEMBER

    The banks will surely have to introduce an employee of the week award for the most seriously irresponsible loan written? Sadly, it would likely have very many contenders wishing to brown nose.

  32. Can wait to see the Hayne Frydenberg awkward handshake redux. Reckon next time Hayne’s going to beat the cvnt to death with one of the printed copies of the findings.