Commonwealth and Westpac are most exposed with 60% of their lending in home mortgages.
"The risk we see in the Australian mortgage credit market is that revenue pressures, especially in decelerating housing credit growth, lead to the commencement of the next cycle of degradation in underwriting standards," Mr Martin said. "Our industry liaison suggests that this process is starting to occur but it hasn't slackened to the extent seen in the pre-crisis era.
"Banks (are) selectively retaining mortgage credit risk that previously would have been transferred to the lender's mortgage industry."
Mr Martin said before the downturn most of the lower underwriting standards and high loan-to-valuation ratios were offered by smaller players and non-bank lenders.