My understanding is that in the 80's lending practices were so...

My understanding is that in the 80's lending practices were so lax that the banks often didn't even manage to get security over the borrower's assets - so called 'negative pledge' agreements. So when the loans went sour the banks took massive hits.

Also, lending to businesses and corporates was disproportionately high. In a downturn, corporate profits will dip - and in many cases turn into an outright loss. Much less reliable than lending to real humans earning an income.

It seems to me that in the present day, if things turn sour, the banks will reliably have security over a substantial underlying asset (a home) which they can sell to recoup their debt. This is helped further by mortgage default insurance payouts. And even in a recession, most mortgage holders will still continue to work, earn an income and be able to make repayments on their loans, unlike businesses which go bust.

And I don't see a problem with interest only loans as long as it's going mostly to people who can afford those loans. The RBA doesn't seem too concerned, describing the quality of bank assets as "very good overall" in a review last month. Maybe RBA and APRA are wrong ,and the quality of the banks loan book is much lower than they appear, but I'm happy to bet against this view, seeing as the shares have already been sold down anyway.