MNI BRIEF: Aussie Banks In "Good Shape" As Rates Rise - APRA

The outgoing chairman of the Australian Prudential Regulation Authority said banks are in "good shape" to weather higher interest rates and lower house prices in a speech on Wednesday.

Wayne Byres said Australia finds itself in an environment "that we all knew would eventually come", with rising interest rates and falling house prices "occurring sooner, and at a faster rate, than most people anticipated a year ago." (See MNI BRIEF: Aussie New Home Sales Slide 15% as RBA Hikes Bite).

He warned that borrowers with only a small equity buffer or high leverage would be "particularly challenged", while borrowers with low fixed rates face a "significant" repayment shock in the future. Byres said the Australian banking industry had built its prudential strength in recent years. Though there may be pockets of stress, he said "there is no sense it will threaten the soundness or stability of the system."