The visible hand in economics

Mortgage markets: Australia (and NZ) vs the US

Posted on: November 10, 2008

Following today’s terrible house price figures (I don’t have to see them to know they would be bad 😛 ) I thought it would be appropriate to go back to the comparison of NZ (and Aussie) to the US – at least for housing.

Greg Mankiw links to an article in the Wall Street Journal.  Read this:

When Australians borrow money to buy a house, they know that if they default and the mortgaged property doesn’t cover the debt, they will be responsible for the shortfall. And the lender will chase them for it. It’s a neat way of reminding Australians to borrow responsibly.

In America, where populist post-Depression laws in many states have mandated loans be nonrecourse, the opposite is true. Americans can take out a mortgage more or less as a one-way bet. If you can’t afford the repayments and can’t refinance, you just send the keys back to the bank. Borrowers wipe their hands of liability.

Surely hearing how moronic lending practices are in the US makes us all feel better about the relative outlook for our banking and housing sectors.  Although I bet to spite me that a major Aussie bank has gone bankrupt while I’ve been out of the country 😉 (again this was written on Sunday Nov 2)


8 Responses to "Mortgage markets: Australia (and NZ) vs the US"

[…] Read the rest of this great post here […]

[…] See the original post: Mortgage markets: Australia (and NZ) vs the US […]

[…] Go here to see the original: Mortgage markets: Australia (and NZ) vs the US […]

Jingle mail is one of the contributory factors to the US meltdown.

No Aussie bank has gone belly up altho ABC Learning is doing its best to sink CBA.


[b]INVESTORS:[/b] Stop losing money on your projects. Stop buying the wrong properties. Stop overpaying. Our professinal software allows you to [b]evaluate your rental investments in minutes.[/b] Cap Rate Analysis based on unlimited number of units, Sensitivity Analysis, Discount Cashflow Analysis – all explained in detail and at your fingertips in seconds.

Anyone can use this software to make more money in Real Estate – no matter what skill level investor or computer user you are!

[b]AGENTS:[/b] Start speaking the same language as your clients. Next time you are asked about the Cap Rate, Cash – on – Cash Return, Payback Period, or projected IRR of the property, have the answer in seconds!

Use our software to create professioanal-looking reports as supplements to your standard listing sheets.

[b]We offer the following:[/b] [url=][b][/b][/url]
1) Free 30-minute phone walk-through of the software when you download
2) Great Customer Support as long as you use the software
3) Free 30-Day Trial – Try our fully featured software at no risk!

“Jingle mail is one of the contributory factors to the US meltdown.”

Old Jingle mail – love the term 🙂

[…] poor nature of savings in the US, and the fact that there is no individual responsibility in the housing market or even in the realm of taxes (every third ad is either about getting a lawyer to lower your taxes […]

[…] (as lenders and households actually do face the risk associated with there decisions, unlike the US […]

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

Add to Google
%d bloggers like this: