If you add to this the early signs that housing values are beginning to fall in NSW and have flatlined in Victoria, there are sufficient indicators to justify concern that an increasing portion of borrowers will find it difficult to pay the interest on their loans. But while there are problem pockets - particularly in the mining regions, none of the banks have called out much by way of broader based trends. Westpac, which reported lacklustre growth in full-year profit on Monday, suggested that when it comes to stressed mortgages - nothing to see here. It's 90 day delinquencies for mortgages have fallen in the year to September 2017 by 3 basis points - or 0.03 per cent in part because there is some levelling off in Western Australia and Queensland mining affected areas. Westpac chief executive Brian Hartzer assured the market he was comfortable with the risk level of the bank's housing book, adding - as many bank executives have in the past - that the key component is employment. And this is one area of the economy that doesn't appear to be problematic right now. Economists are not predicting unemployment to rise meaningfully - rather to hold fairly steady.

The other big swing factor that could sour the quality of mortgages is higher interest rates. The sustained period of low interest rates is what was behind a flood of investors into the housing market over the past few years but Hartzer like many others don't see rates moving up in the near future. A review of bank results that was released on Monday by KPMG says "vulnerabilities related to household debt and the housing market more generally appear not to be impacting the financial results of the majors". If Australia is experiencing a housing bubble and it bursts rather than gradually deflates, the quality of the mortgage book might look different. While KPMG concedes that household indebtedness continues to rise, it says the indicators of household stress remain contained and that low interest rates are supporting households' ability to service debt and build buffers.

"Continued focus of the regulators on some of the riskier types of borrowing, such as interest-only and high loan-to-valuation lending, are being addressed by the majors through repricing and tightening lending practices. These activities, while impacting growth, will strengthen the resilience of the majors' retail portfolios," according to KPMG. The banks are clearly bubble deniers and they don't deal with crystal balls. They are simply reporting their current experience which is that most mortgage holders are repaying interest on time. If Australia is experiencing a housing bubble and it bursts rather than gradually deflates, the quality of the mortgage book might look different. (UBS' Global Real Estate Bubble Index ranks Sydney at number five after Toronto Stockholm Munich and Vancouver.)

And Hartzer contends a large sharp fall in property values would only be prompted by a rise in unemployment or big interest rate hike - which (again) he doesn't see on the horizon. In any event it does bank executives no service to unnerve the sentiment of the property market. It needs people to take mortgages in order for bank profits to grow - especially at a time when growth is relatively subdued and they are facing earnings headwinds from a number of sources including the bank levy, increased regulation and compliance, and the requirement for increased capital and more investment in technology. Indeed the biggest driver of growth in banks profits in 2017 was the benefits they derived from a fall in bad debts - across many parts of their portfolios including business loans. Loading