You make it sound like it is so easy for WBC to clear it's book of all it's bad debt. Not so simple.
Example. Johnny bought a house in Sydney for $1M in 2017 with 10% deposit. In 2018 its now worth $900k. WBC cant call in his loan as long as Johnny is making the repayments. Over time, prices continue to fall and WBC exposure increases.
2019 now worth $700k, $200k negative equity and his IO loan is turning over.
Johnny loses his job. Defaults. WBC is left holding the bag.
I can see this scenario becoming common.
The real question is when and how much. How much of the household negative equity get transferred to WBC through defaults.??? and don't think so a second that mortgage insurance will save the banks. Invalid through fraud!
Housing Crash 2019??, page-233
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