Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
The Reserve Bank of Australia warned that 25% of variable rate mortgage borrowers could face a minimum debt servicing ratio of greater than 30% of their income if rates were to rise by another 100bp by the end of 2023, its Financial Stability Review released Friday showed.
The bank said one-fifth of borrowers with a variable-rate mortgage -- which account for around 65% of outstanding housing credit -- will have their minimum loan payments increase to more than 30% of their incomes based on the pass-trough of the cumulative 250bp of hikes the Bank has delivered since May. The RBA delivered a smaller-than- expected 25bp hike to 2.6% at its meeting on Oct 4. (See MNI STATE OF PLAY: RBA Taps Brakes, Sees Slower Pace Of Hikes).
The RBA said if interest rates were to rise by a cumulative 350bp by the 2023, which aligns with market expectations, then the share of borrowers facing a minimum debt-servicing ratio greater than 30% would increase to around 25% by the end of 2023.
Assuming interest rates ultimately rise by 350bps, then 60% of fixed rate borrowers would face an increase of 40% in their minimum payments when they expire. Two-thirds of these loans are set to expire by the end of 2023. Data from the RBA's Securitisation Dataset showed that of the borrowers who had rolled on to fully variable rates between February and July this year, 20% had increased their prepayment buffers to more than six months.
The 
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.