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AUSTRALIA DATA: RBA's Financial Stability Review

AUSTRALIA DATA
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Quick summary of the major points from the RBA Financial Stability Review. See Full review here

  • The RBA noted that very few mortgage borrowers are in negative equity, indicating limited risk for lenders in case of defaults. There is currently less than 1% of owner-occupier loans are 90+ days in arrears, although there is a slight increase in borrowers experiencing cash flow shortfalls while the RBA anticipates a slight increase in loan arrears as borrowers face ongoing financial pressures.
  • Approximately 5% of floating-rate owner-occupier borrowers are experiencing cash flow issues, with essential expenses and mortgage repayments exceeding their income.
  • Despite rising loan arrears, Australian banks are reported to have maintained prudent lending standards and have adequate capital and liquidity buffers.
  • Most Australian households and businesses are managing pressures from increased inflation and interest rates, with banks remaining resilient.
  • The review indicates that small firms, which often have low debt levels, are predominantly responsible for the ongoing increase in insolvencies.
  • The RBA cautioned that if financial conditions ease, there is a risk of households taking on excessive debt, which could lead to future financial instability.
  • The RBA highlighted potential threats from China's financial sector imbalances, which could impact global and Australian markets.
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Quick summary of the major points from the RBA Financial Stability Review. See Full review here

  • The RBA noted that very few mortgage borrowers are in negative equity, indicating limited risk for lenders in case of defaults. There is currently less than 1% of owner-occupier loans are 90+ days in arrears, although there is a slight increase in borrowers experiencing cash flow shortfalls while the RBA anticipates a slight increase in loan arrears as borrowers face ongoing financial pressures.
  • Approximately 5% of floating-rate owner-occupier borrowers are experiencing cash flow issues, with essential expenses and mortgage repayments exceeding their income.
  • Despite rising loan arrears, Australian banks are reported to have maintained prudent lending standards and have adequate capital and liquidity buffers.
  • Most Australian households and businesses are managing pressures from increased inflation and interest rates, with banks remaining resilient.
  • The review indicates that small firms, which often have low debt levels, are predominantly responsible for the ongoing increase in insolvencies.
  • The RBA cautioned that if financial conditions ease, there is a risk of households taking on excessive debt, which could lead to future financial instability.
  • The RBA highlighted potential threats from China's financial sector imbalances, which could impact global and Australian markets.