Calls about rising levels of distressed debt amongst the Australian mortgage market are unfounded, according to one leading property advisor.
Paul Mirams, real estate partner at advisory and investment firm KordaMentha, said he had never seen the level of distressed debt in the real estate sector as low as it is now.
Mirams was talking on a panel at the S&P Global Ratings’ 2nd Annual Australian Property Sector Briefing: Foundations Are Holding……For Now held in Sydney on Thursday (3 August).
“I cannot think of a single trend in real estate that is giving the banks a problem at the moment. Rather, I would characterise all of the things we see as bad deals. People make mistakes in every economy. People make mistakes and they’re the things that are falling over at the moment. We don’t have widespread issues in sectors; we have spot fires.”
Talking to Australian Broker
after the event, Mirams flagged the emergence of non-traditional banking as a potential risk for the future economy.
“Historically, non-traditional lenders did the deals that traditional lenders didn’t. The implication of that is that they’re taking credit risks that big banks won’t. The implication of that is that they’re worse deals so that’s why they charge so much.”
While prior to the GFC, banks took deals they shouldn’t have, Mirams said that we are nowhere near this scenario currently.
“It’s just a warning sign,” he said.
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