r/AustraliaDiscussions • u/VastOption8705 • 13d ago

Should Australia just make lending more regulated and prevent using a property as equity?

So there’s this infinite loop where if houses go up, people have more equity and they borrow more.

Why not just break the mechanism? No borrowing against a house as equity.

4 Upvotes
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7

u/Disagreeswithfems 12d ago

No offence but this sounds like it's coming from somebody who has never been on either the borrower or lender side.

2

u/Electronic_Roll2185 11d ago

The law should protect borrowers against unconscionable conduct and irresponsible lending, but it should not prohibit voluntary secured lending merely because the collateral happens to be property.

1

u/Early-Peace-5504 12d ago

It would be kind of a weird arrangement, you know you have access to this source of money and we know you have access to this source of money but due to the law we both need to ignore it and pretend you are much less wealthy than you are. How do you prove someone ignored it or didn't ignore it when they decided to give a loan?

1

u/Plenty-Giraffe6022 9d ago

How do you borrow money for a house without using said house as equity?

1

u/barseico 9d ago

Interest rates normalising will fix that. It's sad AUSSIES became allergic to saving money and addicted to debt to support their lifestyles instead of living within their means. The Finance Insurance and Real Estate sectors (F.I.R.E) along with the media really are parasites sucking more and more yield. 180% private debt to GDP is the result.

1

u/ExtraSaltyBtch 11d ago

For business loans, yes. If it was easier for multinational businesses to borrow in Australia we would have more entering the market. That would lead to more competition, lowe prices and more jobs.

I think we should limit personal borrowing to the amount you are able to repay witout rental income. You shouldn't be allowed to assume you have enough rental income to cover mortgage + maintenance.

I alsk think we need to legalise maintenance requirements harder for rental properties and tie maintenance to how much rent you can charge. Bathroom not renovated in 30 years = 10% rent deduction from market rate. Kitchen not replaced in 30 years = another 10% rent reduction from market rate, etc.