Last week's parliamentary bank hearings were a roaring success - from a public relations standpoint.

In fact, from that perspective, everyone's a winner.

Government MPs got to act tough on the banks, even while opposing a royal commission, putting forward a banking tribunal for consumer redress and asking some genuinely good questions of the big four's bosses.

Labor and The Greens got to ask questions that reminded the public of bank malfeasance, furthering their quest for a royal commission, with a coordinated chorus of 'I've got more questions but I've run out of time' ramming home their case.

While the bank bosses had a few dicey moments - none more so that the Westpac CEO's shaky memory about his meeting with the Treasurer - they successfully batted off most questions for the three hours they were in the spotlight and can now move on, relatively unscathed.

The bank executives will be hoping that's it until next year. That they proved boring enough, but with a suitable amount of contrition and just enough new information, to stave off discussion of a royal commission.

So far, the dearth of media coverage beyond the week of the hearings is a strong sign they've succeeded.

Unpleasant odours hang around banking sector

However, it doesn't take much sniffing to detect a few unpleasant odours emerging from parts of the banking sector.

The CommInsure scandal keeps rolling on, with my colleague Pat McGrath at 7.30 exposing another dubiously denied claim last week.

The week before, I exposed poor credit card lending practices that had resulted in people receiving patently unaffordable limits, including a pensioner with card limits totalling $80,000.

That's on top of Adele Ferguson's work in exposing CommInsure and poor financial advice, and I'm sure she's still getting plenty of tip-offs on more malfeasance.

But the mother lode is home lending. It's where the banks issue over 60 per cent of their loans, and has long been the mainstay of their massive profits.

There is growing evidence this cash cow has been milked so hard the loans are turning sour.

Last week, unfortunately just after the banking inquiry wound up, UBS released research based on a survey of more than 1,200 recent home loan borrowers that showed mortgage fraud is "systemic".

More than a quarter of home borrowers admitted to being less than completely truthful on their loan applications.

These admissions make a mockery of the bank regulator APRA's tougher lending standards - it seems all they have done is prompt people to fudge the figures to make up the difference.

This is not solely a bank problem - the UBS study showed customers who went through mortgage brokers were far more likely to lie than those who went directly to their financial institution.

However, the UBS survey only interviewed people who had been granted loans so, clearly, the banks' documentation and credit checks are not tough enough.

Over the two years covered by the UBS study - 2015 and 16 - the corporate watchdog ASIC has detailed action against 12 mortgage brokers in media releases.

Just over a year ago, ASIC told me that it had secured the banning, fining and/or jailing of 60 mortgage brokers for loan fraud, with over 20 under investigation at that time.

But the UBS study suggests this is the tip of the iceberg, with 41 per cent of those who went through a mortgage broker and then lied on their loan application saying it was at the broker's suggestion.

Four Corners earlier this year revealed evidence that many borrowers don't even know their details are being doctored, with suggestions that some mortgage brokers and bank officers are doing so off their own bat.

Housing bubble could be shattered by royal commission

This is why a royal commission is needed and why the banks will die in a ditch to avoid one - mortgages are their business and if it turns out that Australian home loans are a lot more sub-prime than global investors have been led to believe then there will be carnage for the big four's share prices, and probably the property market.

Not to mention recriminations for the regulators that were supposed to be watching over them.

A royal commission can subpoena documents, such as loan applications, and is well placed to unearth evidence of mortgage fraud and determine whether it is as widespread as available evidence appears to indicate.

Indeed, there are strong economic indications that it may well be widespread.

Home lending growth has easily exceeded wages growth every year since 2000 (and generally did before that as well).

While this increase in debt is manageable for a while, borrowing growth can't keep exceeding income growth forever without leading to insolvency.

This graph clearly shows that, at an economy-wide level, Australians keep owing more and more relative to their incomes.

It clearly implies that banks are giving bigger loans to people at a given income level.

This has been supported by a reduction in interest rates to record lows, but means borrowers will be less able to service their debts if interest rates revert to anything like average levels.

Those who argue that this isn't a problem often point to the increase in household wealth that backs these loans.

But most of this wealth is the very housing that the growing debt has pushed to ever higher values.

Banks' continued profit growth raises concerns

The other factor that indicates a problem is the major banks' continued profit growth.

While it has undoubtedly diminished in recent times, the big four's ability to grow earnings while operating almost exclusively in the minuscule Australasian marketplace raises serious questions about the source of those profits.

One conclusion is that the banks are getting better at gouging their customers.

To some extent, since the financial crisis allowed them to absorb some of their smaller bank and non-bank rivals, this is probably true.

The other conclusion is that the banks are finding new customers and selling more to existing ones within their relatively tiny domestic market.

There is evidence that this is occurring, with the bank bosses admitting to sales bonuses, commissions and incentives that range from around 2-10 per cent of base pay for their customer-facing staff.

Westpac has said it is ending teller payments based on their sales performance, and instead shifting to customer service targets.

However, the bank's CEO Brian Hartzer admitted there are still targets for referring customers to "personal bankers" who will still receive some of their pay based on sales.

Certainly, mortgage brokers have a huge incentive to write loans because commissions generally are their income.

It is little surprise then that the less scrupulous ones would encourage customers to massage their financial details, or just do it themselves, in order to get a loan, and associated commission, over the line.

Only so much blood can come from a host before it dies

In the final analysis, while Australia's big four banks operate almost exclusively in Australia and New Zealand - two countries with amongst the most indebted households in the world - it is hard to see how they can grow earnings without issuing inappropriate credit or selling exploitative products.

After all, there is a fine line between banks having a symbiotic relationship with the economy where they facilitate savings and investment to boost growth and where they become parasites feeding off that productive economy.

The Bank for International Settlements - the central bank of central banks - reckons that line is around 100 per cent of GDP, and Australia crossed it long ago.

If our banks have become parasites, the risk is that there is only so much blood they can suck out of their host before it dies.

That, in the end, is the most important reason why a detailed and wide-ranging investigation, such as a royal commission is needed.

Otherwise, banking scandals will keep Adele Ferguson in Walkley Awards for a long time to come, but most will remain hidden with so few business journalists and regulators to investigate a lot of potential wrongdoing.

Meanwhile, the systemic problem posing the biggest threat to Australia's continued economic growth will remain largely in the dark until it explodes.