The Australian Prudential Regulation Authority recently conducted a mortgage stress test on 13 Australian banks to determine the industry’s preparedness in case of a crash – and banks are not as prepared as they think.
The mortgage stress test included drastic market situations, such as a recession and a sudden rise in the official cash rate. Despite banks appearing to be “reasonably resilient”, APRA chair Wayne Byres expressed concerns on the contingency plans banks have in place. Banks have no clear strategies for cost reductions in case loan rates and bad debts increase.
Read more about this on the Property Observer website.
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