In contrast,borrowers have already seen the value of their homes begin to fall - a trend that is expected to hit hardest in the second half of this calendar year.

Thus,the jury is still out on the extent of the damage borrowers will face - certainly some financial analysts are suggesting it will be more meaningful than the market is anticipating.

Barrenjoey’s banking analyst Jon Mott last week suggested that the 10 per cent of households that have combined borrowings of $200 billion could emerge as a problem for the banks.

In the meantime,investors have been eagerly awaiting the positive bump that banks should receive from higher interest rates and the effect of this on improving their net interest margins.

But as NAB’s quarterly report demonstrated,in the three months to June,this tailwind was barely a gentle breeze.

In NAB’s case,the benefit of higher rates was offset by higher costs of wholesale funding and competition.

This was a source of disappointment for investors because NAB had previously guided to net interest margins being up for the half year which is ruled off at the end of September. It will now fall to NAB to make good on that guidance in the final quarter.

Analysts,many of whom were slightly disappointed with NAB’s quarterly performance because it came in a little shy of their expectations,still figure that the boost in net interest margin to come through is just a little delayed.

The earnings miss was particularly significant and arguably didn’t deserve the 3.2 per cent hit to NAB’s share price. But NAB had a strong half in the period to March and had been something of a darling among the big four.

Given NAB was the first out of the blocks in this season of bank earnings updates,its performance put the frighteners on the remainder of the pack - Commonwealth Bank,Westpac and ANZ all experienced share price falls on Tuesday.

On Wednesday,the Commonwealth Bank will follow NAB and present its earnings. This will be a full-year result and contain far more detail about its performance,commentary on the broader economy and just when those earnings tailwinds might pick up.

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