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LIAR LOANS! Australia Moving Australia's risk Lending into Uncharted Waters ! Renewal Nightmare's

548 views · Published 10 March 2018 · 3:20 · Indexed 18 October 2026

Channel: Mike Martins · 2018 · News & Politics

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what a $%^#@ 'n stupid move !  The customer is worse off!! wth will they but junk on the books ? If there is A banking Correction or they need to raise rates to combat inflation itd game over for the borrower ! 

Liar loans are a type of mortgage loan that became popular during the housing boom of the early 2000s. Liar loans are essentially loans that are given to borrowers without the lender verifying the borrower's income or financial status. These loans were typically given to borrowers who did not have a steady income or who had poor credit scores.

In March 2018, it was reported that banks were again beginning to offer liar loans to borrowers. This was alarming to many experts who believed that liar loans played a significant role in the 2008 financial crisis. In this essay, we will examine why liar loans are dangerous to consumers in the long term.

The primary reason why liar loans are dangerous is that they create an environment where borrowers are more likely to default on their loans. When borrowers are not required to provide proof of their income or financial status, it becomes much easier for them to take out loans that they cannot afford to repay. This can result in borrowers defaulting on their loans and losing their homes.

The second reason why liar loans are dangerous is that they can lead to a housing bubble. When banks are willing to lend money to borrowers without verifying their income or financial status, it creates an environment where housing prices can rise rapidly. This is because borrowers are able to take out larger loans than they would otherwise qualify for. This can lead to an increase in demand for housing, which can cause prices to rise. However, this increase in housing prices is not sustainable and can lead to a housing bubble. When the housing bubble bursts, it can result in a significant decline in housing prices, which can cause many borrowers to default on their loans.

The third reason why liar loans are dangerous is that they can lead to financial instability. When banks are willing to lend money to borrowers without verifying their income or financial status, it creates an environment where banks are more likely to take risks with their lending practices. This can lead to banks becoming overextended and unable to meet their financial obligations. When banks become overextended, it can result in a financial crisis, which can have significant consequences for the economy as a whole.

The fourth reason why liar loans are dangerous is that they can lead to a decline in the overall quality of loans. When banks are not required to verify the income or financial status of borrowers, it becomes much easier for borrowers to take out loans that they cannot afford to repay. This can lead to a decline in the quality of loans, which can result in a higher rate of default. When default rates are high, it can make it more difficult for banks to recover their losses, which can result in a decline in the overall quality of the banking system.

In conclusion, liar loans are dangerous to consumers in the long term because they create an environment where borrowers are more likely to default on their loans, they can lead to a housing bubble, they can lead to financial instability, and they can lead to a decline in the overall quality of loans. While it may be tempting for borrowers to take out loans without verifying their income or financial status, it is important to remember that these loans can have significant consequences for the economy as a whole. It is important for regulators and lenders to be vigilant in monitoring lending practices and to ensure that borrowers are not being taken advantage of.

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