...Negative gearing only makes sense if the capital value is...

  1. 303 Posts.
    lightbulb Created with Sketch. 27
    ...Negative gearing only makes sense if the capital value is increasing. Only an idiot would negatively gear while house prices are dropping....

    The problem is that the "idiots" always assumed house prices would always go up. House prices always double every 10 years. And those idiots appetite for debt grew bigger and bigger as the RBA applauded and the banks profits mushroomed (more multi million dollar bonus and performance incentives for senior bankers).

    Now that the sheet hit the fan those idiots are in denial and hoping the worst is behind us. The truth is the opposite. At least one of the big 4 banks has publicly stated that mortgage credit will be tightened further (trying to shut the barn door) if house prices continue to fall at a higher rate than anticipated.

    That's sounds to me a major preoccupation on the mind of the nation's biggest housing credit providers who are sheet scared of their balance sheet and bad debt going forward.

    The RBA now totally losing the plot on future monetary policy is not a good sign.
 
GET SUPPORT arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.