If the borrower qualifies, the loan won't be at the lowest rate. And guaranteed there'll be a few extra clauses in the fine print.You've got to pay for mortgage insurance on top of your interest - which protects the lender in the event of a default (not you!).
I've spent time writing these loans up. Nothing is free, especially risk.
We've borrowed heavily to maintain consumption and asset bubbles. We've got one of the highest household debt to income ratios in the developed world.It keeps see-sawing between us and the Swiss (for some reason) - but yeah, almost the most indebted households in the world. Bad in anyone's language.
All the money printing by the US Fed and the European Central Bank ended up pumping up assets - that's all that money printing program post-GFC accomplished. The ECB is going to stop the flow of free money shortly after nearly ten years of "quantitative easing" - I wonder what will happen?
I borrowed 80% finance to buy my first home on a casual income stuffing catalogues in a newspaper (savings from same), working 25-30h a week on average for 4 years while going through uni in mid 90's. House address 1/100 Alanvale Road, Newman, Tas. Old weatherboard on block that had been subdivided.
I got the interest posted out front.
I did not pay mortgage insurance.
I did not have guarantor.
Not saying this is the same for all, but this is my experience.
NAB said at the time, probably not a good idea, ANZ said yes.
I wish I listened to NAB and dropped the idea then and there as the person I had look at the house (friend), didn't look at it too hard. The rear of the house floor had been rotten and filled with concrete. The front half still timber had at least problem area of rot and there were other issues elsewhere. the bottom boards all the way round were rotten and basically just paint. I made the yard look fantastic (true, everyone said as it was on corner opposite shop), the sold it 5 years later for 2/3 the value I paid after 18mth on market in a real estate slump (remember them). One of life's lessons