Comments on: Housing is overpriced, Swan is making it so

By: Sean Carmody

Sean Carmody — Thu, 06 Aug 2009 06:22:08 +0000

Meski: it’s true that around 20 States allow you to “walk away” and that certainly exacerbates default rates. In the UK you are not allowed to walk away and default rates have risen there too, admittedly not to the same level as the US.

By: meski

meski — Thu, 06 Aug 2009 05:25:50 +0000

Sean, one reason delinquencies are lower here than the USA, is that there, you can ‘walk away’ from your mortgage, do that here, and you end up still owing.

By: Sean Carmody

Sean Carmody — Thu, 06 Aug 2009 04:57:27 +0000

I agree that it is inappropriate for the Government to be attempting to prop by asset prices and that the FHOG should be dropped. However, reading between the lines of your references to “unserviceable debt” and “overly permissive bank lending policies”, I sense the view that if not for the FHOG, house prices would collapse. I am not so sure about that. Where is your evidence for these loose lending standards in Australia? Banks here were not as quick as lenders around the world to offer non-conforming loans (our equivalent of sub-prime mortgages) and the few non-bank lenders who who offer non-conforming loans have not been able to operate in the wake of the collapse of the mortgage securitisation market. Apart from anything else. if lending standards were so lax, why are mortgage delinquencies and defaults so much lower than just about every other developed country (a notable exception being Canada, which also is experiencing very little mortgage stress).