This perfectly describes the Australian economy right now.
>Recovering from a severe financial crisis typically involves three stages. First, the affected country must acknowledge the extent of the wealth that has been destroyed. This can take some time if the assets that have collapsed in value are held by institutions that have opaque balance sheets and are protected by risk-averse government agencies. The housing market, for example, often takes some time to account for price falls, as owners hang on in the hope of better days ahead, and even if the price continues to fall, they have legal protections in bankruptcy law that delay forced sales. The many complicated instruments that use those underlying mortgages as collateral can also be slow to adjust, as they are difficult to price and banks often cannot sell them once trading dries up in a crisis. All too often, the day of reckoning is put off as banks fail to acknowledge how much the value of their assets has fallen.
>Financial supervisors sometimes look the other way because once they have admitted the depth of the problem, their governments will be forced to take the second step: allocating the losses among their citizens. Even doing nothing marks an implicit decision, as the people and financial institutions that own the assets then have to bear all the pain.
Privatized gains, socialized losses. >oy vey goyim, so what if we made billions of dollars on risky investments >won't you bail us out now, pretty please? :^)
Daniel Rogers
I'm an Ausfag who is in Europe at the moment, who would happily sit out the next 5 years over here as Australia eats shit, but Brexit faggots are tearing up my beautiful EU passport and turning it into a piece of shit UK passport. Fuck Brexit.
Elijah Cruz
auscunt in the exact same circumstance exept i have an irish passport too kek.
UK will still have free movement into eurpope post brexit
Potential first home buyer ausfag reporting in. Waiting out the coming storm @ my parents house while accumulating savings. Probs got at least 2 years before I pull the trigger on a forced mortgage sale.
Ethan Collins
no.
you see unlike uk and us Oz has full recourse loans.
So if you sell you house for less than the debt, you still owe the difference.
You cannot just give the keys back.
Also the tax brakes are massive,
Finally when interest rates went to ~13% to 18% the Gov told the banks not to call in the loans, so people did not have to pay off their loans.
The gov cannot afford x million to suddenly be on the street, so the loans will just be written off
Kek, I love it when goldbugs warn about bail-ins, as though their shiny rocks aren't just as at risk.
Kayden Cox
>not allowed to declare bankruptcy when you suddenly go into a million dollars of negative equity because of a housing crash >somehow this is better
Grayson Davis
Most people will sit and watch as their money vanishes. They wont have the balls to pull the trigger and close their "trade". These people are basically hodlers of property. It will move in acceleration cycles
your missing the point, in the uk and us you just give the house to the bank and thats it.
that makes the whole motivation different to hold on to the house as a bankruptcy really effect your for a long time and is costly
Samuel Ward
>Housing market crashing around 2020/2021 >crypto is in the middle of a bull run again >buy cheap house with crypto
we're gonna make it lads.
Jason Evans
According to investopedia this is the difference.
>The distinction comes into play if money is still owed on the debt after the collateral is sold. In a recourse mortgage, the lender can go after the borrower's other assets or sue to have his or her wages garnished – anything to be made whole, basically. In a non-recourse mortgage, however, the lender is out of luck. If the asset does not sell for at least what the borrower owes, the lender must absorb the difference and walk away; he has no claim on the lender's other funds or funding sources.
Google says Australia has full-recourse loans on mortgages, so if the mortgage holder can no longer afford the loan, then the bank can seize the property and sell it to get back what is owed. If the property sale does not pay off the full amount of the loan (which it will not if there is negative equity as in the case of a property crash) then the bank can go after other assets that the mortgage holder has, including car, personal effects, salary, etc.
I don't see how this is a good thing in the case of a crash. It makes people more likely to not declare bankruptcy and to actually pay their loan in the case of a normal market, but if they literally can't pay it back because of a crash (e.g. negative equity and increasing interest rates and/or a switch to interest + principal from interest only) then it's much, much, much, much worse, right? The banks will be better off than US banks were, but the citizenry will be absolutely fucked. And the banks would be bailed out anyway.
Zachary Peterson
People will still pay their mortgage if they can afford to. Negative equity won't change that.
Getting into the market has cost's, like 5% stamp duty, legal fee's etc.
No one will sell because of negative equity, not even an investor who is getting rent.
The only sellers are those who can't afford their mortgages.
The way you guys carry on you make people think that all the houses crumble into dust.
I never said otherwise. I said exactly what you said.
I will rephrase it for you: *those sellers that can't afford their mortgages* will *also* have negative equity in their homes at the time they can't afford it.
That means that when they declare bankruptcy the sale of their home will not cover their loan and they will still be burdened with debt the size of the difference between the loan value and the sale price of the property, which would likely be many times their yearly income.
We are talking potentially tens of thousands of Australians that will lose their home and still have literally hundreds of thousands of dollars worth of debt that they must bear, likely for many decades. The consequence of this massive nation-wide debt burden will cause a significant slowdown in consumer spending, increase the burden on welfare, political instability, etc.
Hunter Nelson
You have to go back.
Aaron Anderson
"That means that when they declare bankruptcy the sale of their home"
This is where you misunderstand. If they declare bankruptcy they will not have to pay the shortfall. That is the way around it.
When you say," That means that when they declare bankruptcy the sale of their home" you are wrong. 100% wrong.
Sorry to have to put it to you like that.
Anthony Cooper
"That means that when they declare bankruptcy the sale of their home will not cover their loan and they will still be burdened with debt the size of the difference between the loan value and the sale price of the property".
Sorry, your above statement is the full statement which is incorrect.
Ayden Gutierrez
It will be good for economy, goyim. If we get lucky this time and make 5000% on our investment you will get 1.5% instead of 1%
Camden Clark
OK I see the distinction here between defaulting and declaring bankruptcy. And I see what you're saying about them being forced into bankruptcy.
I still don't see how this is better than the US scenario. In the US borrowers just walked away. In Australia borrowers will be forced to declare bankruptcy, which will gravely affect them for the rest of their life, particularly for the few years after they declare, as their name goes on a register.
It goes back to this post: I just don't see how any of this contradicts the description in the OP post, or how it makes any difference between this property crash and the US or Irish crash.
Landon Fisher
My only point was that OP had the bankruptcy part totally wrong. I am unqualified to comment on any other part of his post, however, if he has one thing abhorrently wrong normally other of his presented facts will be wrong.
The doom and gloom is never as bad as these scaremongers make out.
Connor Smith
how much ripple and at what price ?
Dominic Young
The banks are shilling home loans to anyone. Some friends wanna buy and were told they have preapproval for 600k. All they can get is a poxy town house up in reservoir which if the economy tanks will easily eat shit as it's not a primo location and they'd struggle to meet repayments if interest rates doubled. So their loan amount gets bigger, their equity goes down and if they can't keep their head above water they're liable for whatever the difference is between the two. But the catch is they only have the 60k they saved up for a deposit and a garage full of music gear as collateral so they'll be instantly bankrupted. I tried to caution them but they just said oh the banks said it's a great time to buy.
