The inflation is really starting to hurt people and once the savings are gone, that is going to change things dramatically. Already there have been many reports (mostly from USA and UK) of people having to bundle back into their original family houses because they defaulted. I don't think it's going to get any better any time soon, but they keep dangling the carrot of "next year the rate will come down" but what if it doesn't? It's going to mean doom to a lot of first time home buyers especially, not to mention many elderly that are not going to be able to cover their bases. It's a dog eat dog world when things start going this way. Very sad.
And just think how in Australia, the bank of mum and dad put a lot of the money in for the deposits. This means that they lose it in the default and, the kids won't inherit it later either. Big impact.
That's true and they've lost the asset in an asset class that only seems to be appreciating in value over the space of a mortgage bond. It's a lose lose all around, even the banks don't really do well out of this scenario.