The credit rating agency Moody's is downgrading its outlook on the big four Australian banks, from "stable" to "negative". 

Commonwealth Bank, NAB, ANZ and Westpac face challenges in the remainder of 2016 and beyond which could lead to lower profits and greater vulnerability to shocks from the outside.  These challenges include: declining profits from low interest rates; rising household debt from a booming housing market; increasing bad loans; lower wages and income in Australia's ongoing economic transition.

But the report isn't all doom and gloom, and points to a way out for Australia:

"Despite these headwinds, Australian banks maintain strong buffers in terms of capital, improved liquidity profiles, and structurally high profitability," Moody's said in the report.  "Their outlooks could be revised to stable if the operating environment in Australia improves, with a stabilization in household leverage, nominal income and house price metrics, and/or these banks further improve their capitalization and funding profiles."

Earlier this month, Moody's affirmed Australia's triple-A sovereign credit rating, while Standard and Poor's placed Oz on credit watch negative from its previously stable outlook.