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MNI BRIEF: RBA Warns of House Price Risk

MNI (Sydney)
SYDNEY (MNI)

The Reserve Bank of Australia has issued a warning on the risk of "excessive borrowing" due to low interest rates and rising house prices in the quarterly Financial Stability Review, released on Friday.

The RBA said investors have been taking on more risk as they seek higher returns, and that some asset prices "appear high given the pandemic still presents a risk to economic activity.," see: MNI STATE OF PLAY: RBA Looks To 2022 For Next Policy Moves.

"Vulnerabilities can increase if housing market strength turns to exuberance with borrowers taking on greater risk given expectations of further price rises and banks' potentially easing lending standards," the statement said.

Australia's national average home price has gained 20.3% over the last year, prompting the Australian Prudential Regulatory Authority to increase the interest rate buffer test for new lenders.

MNI Sydney Bureau | +61-405-322-399 | lachlan.colquhoun.ext@marketnews.com
Policy NewsHomepageAPACAustraliaBriefStoryRegion
MNI Sydney Bureau | +61-405-322-399 | lachlan.colquhoun.ext@marketnews.com
Policy NewsHomepageAPACAustraliaBriefStoryRegion

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