It does not tell me that. The "Westpac 420 loan data" to which...

It does not tell me that. The "Westpac 420 loan data" to which you refer is a SAMPLE collected by PWC (hired by WBC). This was dealt with publicly by WBC
https://www.copyright link/business...ys-release-of-mortgage-report-20180507-h0zqw2


The question is the quality of the overall loan book. "Mortgage losses were only $47 million, compared to almost $440 billion of housing loans; and only 398 properties were in possession, out of 1.6 million loans. More than half of Westpac's mortgage portfolio had originated under lending standards that have been progressively tightened since 2014 and the bank said almost 70 per cent of mortgage borrowers were ahead on repayment".


Those wishing to review the source documents can go to the following links which are the report submitted by PWC (hired by WBC to Review Mortgage Serviceability) and then WBC response. Both are documents presented to the Royal Commission

Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (RCMBSFSI) 2018b, “Westpac Banking Corporation APRA Targeted Review of Data used in Mortgage Serviceability Assessments”, PWC, May 2018,
https://financialservices.royalcomm...ents/exhibits-2018/23-march/EXHIBIT-1-190.pdf
and
Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (RCMBSFSI) 2018c, “Westpac Response to Targeted Review Findings”, WBC, May 2018,
https://financialservices.royalcomm...ents/exhibits-2018/23-march/EXHIBIT-1-193.pdf
NOTE the actions being taken by WBC. Any who complains about stricter lending standards and credit being denied shall be strung up by their own jewels.

While it was not a good look for WBC (yielding headlines like "explosive documents, ... widespread failings, ...quality and riskiness of its home loans" from outlets like ABC News (surprise surprise)) it also needs to be read in context and while UBS banking analyst Jonathon Mott choose to write “the data raised questions regarding the quality of Westpac’s $400 billion mortgage book” it was also reported that 2 very different things are being mixed up

a) APRA lending standards and

b) Responsible lending laws (whereby lenders are required to make reasonable inquiries into a borrower’s financial position and take reasonable steps to assess whether credit being extended is not unsuitable).

Put into context at the time (May 2018), mortgage losses of $47M on loan book of $440B is small. WBC noted for those 420 mortgage files reviewed “… only four of the loans in the sample are currently greater than 30 days past due of which only one is more than 90 days past due”.

Moving forward the full year results



and



and well collateralised







So Naga, what is it that you see in the "Westpac 420 loan data" that is so alarming. You have written
"the data is telling us that 50% or more of the Westpac loan book is non prime or worse. Interest only resets 2018-2021 look to be aropund 450B,"

I contend that's a misrepresentation (i.e. perhaps you didn't know any better?) of fact
1. WBC mortgage loan book is $445 with I/O representing 35% and contracting
2. Not all I/O would be subprime
3. Loans are well collateralised ... only 3% have LVR above 90%, only 10% have LTV above 80%.

OK say there is a massive housing crash ... homes lose 40% of value ... (apart from the economic catastrophe) assuming what was once valued at $100 now is $60 and 100% of mortgages (not just I/O) in that bracket (43%) cannot make payments ... they all default. WBC sells all properties for $60 (we'll assume orderly sale as it wont happen overnight). What "cash" has WBC lost at this point? This is why collateral is taken, Don't confuse the US subprime fiasco with ARMs with the Australian housing market.

If you would clarify the outcome your post is trying to reach?