Landlord boom a bigger risk for Australian bad debts than businesses

Sydney

THE boom in Australian buy-to-let mortgages that has helped fuel record household borrowing could be the next driver of bank bad debts rather than corporate defaults.

While business loan losses were behind the biggest bad debt cycles in the past three decades, according to a discussion paper from the Reserve Bank of Australia (RBA), unprecedented borrowing by individuals and signs that the residential property market is coming off the boil mean that for banks the next one might be different.