Australia’s big four banks are ill-prepared for a housing crisis, according to AMP Capital’s head of credit markets, Jeff Brunton, who claims that official stress tests failed to account for the impact on mortgages that did not default. He takes up the argument pioneered at MB by Deep T, from The Canberra Times:
“The banks will have enough capital to deal with the mortgages and the corporate borrowers who default, but they will then be left with a financial system that has got a high loan-to-value, with many Australians in negative equity positions”…