Reader Mail: Mortgages Good for Banking Industry, Bad for Debtors

Reddit

A note from a reader up north:

Hi
  
I am an Accountant from Townsville Queensland Australia and I would like to share a story a client informed me of yesterday which I found unbelievable.

She owns 1 House Value 300,000. Debt 100,000 She has just been approved by a bank for a loan of 500,000 to buy two units Her Gross income of 30,000 , I could not believe what I was hearing. Single mother child 16.

What is the banking industry up to with this type of finance availability. Moral to Fail.

Also I Enjoy your articles keep up the good comments.

The deeper in debt people go, the better it is for the banking industry. This is good for bank shares, if you happen to own them, but not as good for debtors. The trouble is, everyone feels richer when they take out a mortgage and the value of the house appears to rise. In reality, it’s more like a bad card game in Vegas…where more and more people find themselves flush and busted.
 
And a comment from Phil C. in Tasmania:

Hi folks,

I don’t understand much of the economic jargon you use, and get a headache when I try, but I won’t need to while you continue to use such wonderful and colourful imagery in your explanations.

Love your articles, the way they are written, the very laid back humour and the free delivery every day. Sometimes I am tempted to think that this is other than planet earth?

So, spare the moisturiser on your thick skins, we want to continue to hear the truth, the whole truth and nothing but the truth according to the DR.

Regards and thanks
Phil Clark
Tasmania

Our pleasure Phil, though we do moisturise when we’re back here in the Mountains. It’s a dry heat at this altitude. Drink lots of water if you ever visit.

Dan Denning
The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
Reddit

Leave a Reply

Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.
If you would prefer to email the editor, you can do so by sending an email to letters@dailyreckoning.com.au