The Age quoted "an estimated 60 per cent of Australian banks’ loan books is secured by residential property, ...". With the reversing of foreign investment policy, the demand of residential properties has definitely softened, and the resale values of the over-valued properties will face reality check. There is a good chance the real estate bubble will burst sooner than many expected, not dissimilar to what had happened in the USA.
In total, all small / medium businesses provide over 50% of employment, and many of them at present are not doing well. This can only translate to shaky employment future for many, and uncertain mortgage repayment. If these people were to default, the final selling price may not cover the original loan.
For the past 4-5 years, many people borrowed well beyond their repayment ability in order to secure their dream homes. Unfortunately, further upward movement in interest rates will turn their dreams into nightmares.
In total, all small / medium businesses provide over 50% of employment, and many of them at present are not doing well. This can only translate to shaky employment future for many, and uncertain mortgage repayment. If these people were to default, the final selling price may not cover the original loan.
For the past 4-5 years, many people borrowed well beyond their repayment ability in order to secure their dream homes. Unfortunately, further upward movement in interest rates will turn their dreams into nightmares.