Banks going bust has been a major source of anxiety for many people at many points in time. It was a large piece of the Global Financial Crisis (GFC) puzzle and sparked stock market carnage in 2023, when Silicon Valley Bank’s collapse hit headlines.
But while depositors and shareholders face one set of risks when a bank collapses, borrowers will have a different set of questions entirely.
Do you suddenly get a free pass on repayments? Could you be forced to cough up the full balance? And what happens to your redraw facility or offset account?
Firstly, there’s no need to panic. Here’s what you might expect if – however unlikely – your home loan provider goes bust.