Aussie Banks At Risk of Housing Bubble

[kandinsky]

By Jonathan Pearlman For The Straits Times In Sydney

AUSTRALIA'S banks have the world's highest exposure to home mortgages and have been warned to rein in lending to avoid a crisis caused by falling property prices.

The warning was sounded in a new report by Moody's Analytics, which said Australian home prices are overvalued and present a "major concentration risk" for the nation's banks. The report said home prices are most likely to fall slowly, but a crash remains a possibility.

....

Source

 

[The Fence]

Nothing new here.

 

[HotRod]

....and yet we're still waiting.

Jonathan Pearlman and Steve Keen should do coffee and swap stories.

 

[Ausprop]

pfff. comical.

 

[Peter_Tersteeg]

Big deal. If house prices fall 50% tomorrow, there'll be a lot of people selling, but only a very small percentage of the overall market. Those that don't need to sell won't. As a result, the banks would take a profit hit, but it wouldn't put them under.

At this point anything that takes down our economy to the point where the main banks go under, will be an event that takes down government and business as well. Perhaps a complete collapse of society? (I've got to stop reading zombie fiction).

Aussie banks did very well out of the GFC, I imagine they'd make a killing from a property collapse.

 

[mattnz]

"AUSTRALIA'S banks have the world's highest exposure to home mortgages and have been warned to rein in lending to avoid a crisis caused by falling property prices."

They need an economics lesson. There is a key word wrong here.... reining in lending will CAUSE a crisis because it would ensure house prices fall. It certainly wouldn't avoid it.

 

[Aaron_C]

The reason why banks lend heaps on mortgages is because under BASEL residential mortgages are one of the lowest risk capital that a bank can have. The only things less risky are cash and treasuries....clearly this author is an idiot.

 

[Corey Batt]

Can the Australian Banks please reduce their exposure to mortgages and instead be like everyone by using their funds to buy repackaged derivatives handballed between three different parties before anyone realising they are just sold off failing mortgages.

Oh wait.

 

[vaughan]

Can the Australian Banks please reduce their exposure to mortgages and instead be like everyone by using their funds to buy repackaged derivatives handballed between three different parties before anyone realising they are just sold off failing mortgages.

Oh wait.

Nobel prize?

 

[see_change]

Can the Australian Banks please reduce their exposure to mortgages and instead be like everyone by using their funds to buy repackaged derivatives handballed between three different parties before anyone realising they are just sold off failing mortgages.

Oh wait.

My thoughts exactly