Michele Bullock says Australians are well-placed to manage rising interest rates, but warned cost of living and falling real wages posed a risk to households carrying a lot of debt.
Reserve Bank deputy governor Michele Bullock says Australians are well-placed to manage rising interest rates, but warned cost of living andIn her first major speech since being appointed in April, Ms Bullock told the Economic Society of Australia recent borrowers, particularly those that used first home buyer programs were most vulnerable.“They are more likely to have borrowed at high [debt-to-income], have had their serviceability assessed at lower interest rates ...
Big four lender ANZ on Tuesday updated its interest rate outlook to forecast the cash rate to rise to 3 per cent year’s end.Around half of households with fixed-rate home loans would be hit with a 40 per cent increase in monthly repayments if the official interest rate rises to 3 per cent, in line with ANZ and financial market expectations.
Further, around half of variable rate mortgage borrowers had accumulated prepayments to service their loan repayments for almost two years or more.“While households have high levels of debt, this is accompanied by sizeable holdings of assets,” Ms Bullock said, and households with the most debt also tended to have the highest liquidity buffers.
Indebted households in the bottom 20 per cent of the income distribution hold less than 5 per cent of the debt.
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