The last three months have certainly not been easy for shareholders of Australia's oldest bank.
During this time the Westpac Banking Corp (ASX: WBC) share price has tumbled over 11%.
Is it time to buy the dip?
Over the last six months I said numerous times that I felt the Westpac share price was far too expensive and in danger of declines.
Well now those declines have come, I can't help but feel that Westpac would finally be a good option for investors.
At the current price the bank's shares are changing hands at a reasonable 13x trailing earnings and 1.7x book value.
This is about fair value based on historical averages and a discount to rival Commonwealth Bank of Australia (ASX: CBA).
But what are the risks?
The housing market and rising household debt are two concerns that I feel are worthy of considering before making an investment though.
Whilst I don't expect the housing market to collapse, if it were to do so then the banks would almost certainly be impacted greatly.
Furthermore, Australian household debt is at all-time highs. If this debt proves unsustainable, it has the potential to lead to a US-style mortgage default crisis.
Foolish takeaway
Whilst the housing market and household debt levels should be a concern, I am confident the robust local economy and a positive global outlook will allow Australia to circumvent these dangers and the banks to continue to prosper.
In my opinion this makes it a good time to invest in Westpac, especially with its shares providing a trailing fully franked 6.3% dividend.
