The RBA (Reserve Bank of Australia) Governor says the banks will be just fine.

A significant group of borrowers are at serious risk of default, but Australian banks will be able to comfortably survive any losses, argues the Reserve Bank.
"In the adverse scenario, the share of borrowers experiencing negative spare cash flows by December 2023 would increase slightly to 17 per cent," the bank forecast.

Borrowers in trouble are no more than collateral damage.
Business as usual.

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whowasthatmaskedman · 70-79, M

OK.. First off, if a home buyer has a small deposit and it considered any kind of risk at all they are usually obliged to carry mortgage insurance..Now sadly this is not to protect them in a default. It is to protect the bank against taking a hit if the realisation of the property doesnt cover the debt.
Second, since the interest rates dropped there have been warning about overextending, looking to when rates rose again. And rates are indeed not ridiculously high now. At the time we purchased our home, rates peaked at 17.5 %. So this aint high.. THATS high..
Also there are a number of people out there with negatively geared properties, writing off the mortgage to gain a break on income tax. (Thats a thing here) Which should have been cleaned out of the system years ago to curb rising prices.. So I have little sympathy for those people. There is going to be some pain here. But many of the people feeling it will have ignored a lot of warnings.😷

Gusman · 61-69, M

@whowasthatmaskedman Agreed. Many took Phillip Lowes word that interest rates would not rise for 12-24 months.
Still, surely they must have a back up plan. Fools abound. 🥺

whowasthatmaskedman · 70-79, M

@Gusman Lowe is an economist and a good one. However, he is by the book, going by previous performance and didnt see the supply chain stoppages and the kick on effect they are going to have just as Covid support came off. He is correct in the need to tackle inflation first..But of course he will face the block when his turn is up as the fall guy.. And as rough as things might get here for a year or so, other countries are in way worse shape..😷