right but in this case the house value never changed, so there was never any loss. Suppose the house value went down 5%, then you'd be totally wiped out (ie. you lose your entire deposit).
It is a fair point that for small negative changes you are getting a leverage effect (i.e. for a 1% down move in asset value you do have a 20% loss on your capital).
There is however a floor so the payout profile is a lot more like an option.
right but in this case the house value never changed, so there was never any loss. Suppose the house value went down 5%, then you'd be totally wiped out (ie. you lose your entire deposit).