(2) Comment on the validity of this view. (less than 125 words)

The quotation below is taken from the ABC News article 06 February 2022 by Michael Janda (see iLearn for a copy of the article).

In addition to a lower purchase price, Murray suggests that HouseMate would also provide the finance, with government loans priced at the cash rate plus 1 per cent. At the moment, that would be a 1.1 per cent variable rate home loan, way below the typical bank rates of 2.4 per cent.

Some people would view this approach to financing as being overly simplistic and not viable, particularly when the risk of bad loans (loans where the borrower cannot meet its obligations to pay the government) is taken into account. There are good reasons for typical bank rates of 2.4 per cent.