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There are some analysts and economists I've read who are looking at the situation and warning that there is a lot more fraudulent lending than most would think.

There are some analysts and economists I've read who are looking at the situation and warning that there is a lot more fraudulent lending than most would think. On an anecdotal level I've also heard more than a few people say they it was hinted by banks that they could put a bigger number in the 'income' box and borrow more money. On that, it will be interesting what would come out if a future royal commission into the banking sector happens. But even if not, it wouldn't matter. You can have the best capital adequacy in the world, and have only lent to people with rock solid ability to service their loans - but you have a real problem if there's a drop in prices and you have hundreds of thousands of people with negative equity on once-million dollar assets.

a_bonobo 9y ago
>On an anecdotal level I've also heard more than a few people say they it was hinted by banks that they could put a bigger number in the 'income' box and borrow more money. There is at least one survey showing that liar loans are common in Australia: https://www.domain.com.au/news/australian-housing-market-built-on-500-billion-of-liar-loans-ubs-20170911-gyf32l/ https://www.domain.com.au/news/australian-housing-market-bui... About 500bn mortgages are based on inaccurate/false information, 1,100bn are 'correct'. Note that these numbers are estimates because they are based on surveys, Australia's banking system does not need to check this. Liar loans were a big factor in the US' started financial crisis: https://www.nytimes.com/2015/02/13/upshot/how-mortgage-fraud-made-the-financial-crisis-worse.html?_r=0 https://www.nytimes.com/2015/02/13/upshot/how-mortgage-fraud...