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'Investor' is a dirty word for first-home buyers — but are they the real villains? (www.abc.net.au)

submitted 2 days ago by [email protected] to c/[email protected]

22 comments fedilink hide all child comments

Property investment is ingrained in the Australian psyche, but is it too easy to cast landlords as the villain in our housing crisis?

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[–] [email protected] 10 points 1 day ago (1 children)

That's not really how mortgages work.

If your house is worth less than your mortgage the bank can't just ask you to cough up. That's absurd really.

It's just that if you sell you can't settle the mortgage with the proceeds.

[–] [email protected] -1 points 1 day ago (2 children)

Negative equity is absolutely a thing - and if a property with a 900k loan drops to 650,000 for example, then banks consider it a risk

[–] [email protected] 4 points 1 day ago

I'm not disputing either of those points.

banks start wanting you to close the gap between what you owe them, and what they can get if they take the house in lieu of payment.

This is absolutely false.

Some loans, "margin" loans, do work how you say and the bank will make a "margin call" asking the borrower to repsy a lump sum to reinstate the margin. However, this type of loan is not generally used to buy residential property.

[–] [email protected] 2 points 1 day ago

They’re not saying it’s not a thing, just that banks don’t call in the mortgage just because you’re in negative equity. It’s a problem if you try to borrow more or refinance.