Interesting to see various banks liberalising their lending policies in the current market.
Given the slowing of the market and competitive nature of the mortgage industry I wonder whether this is setting up individuals and financiers for some grief in the future.
Whilst not comparing them to the late 80’s, where banking practices became less strict to generate new business in a burgeoning and then collapsing market, there could be some parallels.
For those who remember the late 80’s and early 90’s as investors, do you think this is a fair comparison?
There are probably some truisms that exist in lending. One of my friends who was a rural bank manager reckoned there was a lot of truth in issues of serviceability if total indebtedness exceeded gross annual farm income (before expenses) for farmers.
No doubt there are cycles of restriction and liberalisation as the corporate memory fades.
Ultimately, a borrower has made the choice to borrow and should not kid themselves about their ability to repay.
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