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1 month ago@Dave Good point - a general drop in the market won’t cause much change to rates overall. That will still vary a bit due to the differences in the valuation changes by suburb, of course - if your valuation drops less than most parts of your region, your rates may even increase.
With regards to other effects on home owners, as I alluded there are potential issues that could arise if equity goes negative. This won’t be a problem for most, especially given the typical deposits required by the banks for home loans, but if valuations drop enough it may come up.
@Dave Sure, I should have said “increase more as compared to the average ratepayer”.
As to the effects of negative equity, you’re likely right about the risk of foreclosure, but the difficulty of getting further loans at a reasonable rate is still a potentially significant downside, given how often unexpected expenses come up, especially early in home ownership when equity is most likely to be low.