Global ratings agency Standard and Poor has warned Australian Banks on high credit exposure after a recent report shows 60% of loans are allocated for residential property. S&P has warned banks that the high unemployment rate and slow economic growth might catch up and affect future mortgage repayments. Mortgage lending has surged throughout 2013 as the nation experienced a 10% increase in house prices.
Banks are advised to be aware of these market conditions as future interest rate hikes can become a problem, especially those that have recently entered the property market. Although Australian banks typically have interest rate buffers to accommodate rising rates, repayments may still be affected as a slower wage increase can be an issue for some households.
Read more about this on the Australian website.