Reserve Bank chief's loans warning on property boom
'Mr Macfarlane outlined his best and worst case scenarios for Australia in his strongest warning yet about the property market. In a worst-case scenario, Australians would ignore his advice and continue borrowing for the investment property market while the world economy deteriorated and Australian jobs 'disappeared.'

"When people lose their jobs and can't pay their mortgages, that kills a housing boom stone dead," he said. "If over the next 18 months the world economy doesn't recover and just sinks down further and . . . households also keep borrowing over that 18-month period, then that would result in a very nasty explosion and a huge amount of financial distress. That would be disastrous." People paying a quarter or more of their income in mortgage repayments were the most vulnerable, he said. The best case scenario was if the world economy improved and Australians kicked their addiction to borrowing money.'

Reserve Bank chief's loans warning on property boom
'Mr Macfarlane outlined his best and worst case scenarios for Australia in his strongest warning yet about the property market. In a worst-case scenario, Australians would ignore his advice and continue borrowing for the investment property market while the world economy deteriorated and Australian jobs 'disappeared.'

"When people lose their jobs and can't pay their mortgages, that kills a housing boom stone dead," he said. "If over the next 18 months the world economy doesn't recover and just sinks down further and . . . households also keep borrowing over that 18-month period, then that would result in a very nasty explosion and a huge amount of financial distress. That would be disastrous." People paying a quarter or more of their income in mortgage repayments were the most vulnerable, he said. The best case scenario was if the world economy improved and Australians kicked their addiction to borrowing money.'