cant watch it at work, ill take a watch later. Are you saying you "predicted" people would be in trouble? Hardly much of a prediction. It was going to happen. It happens when things are going well too. Im just saying its not going to be an apocalypse.
No one had the crystal ball to anticipate runaway inflation in 2019
but what buffer would be acceptable to you? 10%, 20%? no one would get into homes then except people who probably don't need yet another one, furthering inequality.
In any case its a balancing act about making sure that people can pay and lending is accessible. You have to appreciate that a financial assessment is a "point in time". Can you pay based n what you've presented today. Affordability is never going to be able to be assessed looking forward for the life of the loan. Not even 1 year ahead. That's what the stressed rate hopes to do somewhat. Most people also progress in their earning capacity when things are normal. But a lot can happen in 30 years. Heck looks what happened in 2 years.
Peoples circumstances change and banks cant be held liable for that happening. People get divorced, lose jobs, become injured, have family tragedies, become disabled, battle mental health just to name a few. Would you have banks take blame then too because the customers circumstances no longer match those that were on the application? Where the line for you? Its good an well to bash a bank, but what's your solution to this? What in your eyes is "responsible"?
There are hardship options for customers experiencing short to medium term changes to circumstances. These include repayment deferrals, reductions in interest and/or payments etc, but these are not permanent and are a tool to help people get through short/medium term unexpected challenges. But there are times where you just cant recover. Its sad, but that's generally not the banks fault. It's also often not the customers fault. People lose their homes. Its just a fact of life.
After the royal commission we had lenders get so tight. Regulators set limits and banks abided. The market cooled, but had the unintended effect of only letting the haves access finance. Regulators then told banks to pull back, gave them the parameters, then complained that that also had unintended outcomes. The regulators think they have a handle on this stuff, but they don't always. The pre covid growth (2016/18) was as a result of APRAs macro prudential unwinding of investment caps which then made the market explode with investment which made housing even less affordable. Not the banks fault. Not the RBAs fault. Not investors fault. APRAS fault. Now they're at it again, tinkering with this shit.
Realistically, I'm actually a big believer that regulators should have little say in what is "responsible" . its too subjective and always disadvantages various cohorts of people. The banks should lend whatever the customer thinks they can pay based on their own budget with a handful of cursory checks by the bank that the bank sets its appetite around. i.e. less than they do now. If the customer over extends, tough titties. Leave the responsibility and consequences to the customers. Might make them a little more cautious and likely to become more financially literate. We always complain that people need protections, then we complain about being in a nanny state when laws and controls are implemented over society to protect them, and then complain when they are working as intended or have unintended consequences like everything was should have been able to be predicted.