RBA – small but rising share of Australian households in early stages of financial stress

From the Reserve Bank of Australia Financial Stability Review (full text here)

  • Global financial
    stability risks are elevated and growing
  • Risks include China
    property sector, a disorderly fall in global asset prices, exposure
    to commercial real estate
  • Tightening in global
    financial conditions could slow growth, lift unemployment
  • Fall in global asset
    prices could raise funding costs in Australia, limit supply of credit
  • Australian financial
    system sound, some pockets of stress among household borrowers
  • Australian banks
    well capitalised, have low exposure to commercial property
  • Banks well
    positioned to manage any increase in mortgage arrears, absorb loan
    losses
  • Small, but rising
    share of households in early stages of financial stress
  • Most borrowers well
    placed should interest rates rise further
  • Most borrowers also
    well placed to cope with extended period of high rates
  • Any increase in
    unemployment would add to stress, but unlikely to threaten system
    overall
  • Risks posed by
    non-bank institutions in Australia remain low

Financial stress has risen, just a little according to the RBA above, in response to the rapid and sustained increase in interest rates. The RBA has hiked rates in battle to get inflation back under control. Its making a dent but the rate is still way above target level and that means rates will remain high for many months ahead.

AUD/USD is little changed in response to the report.

Source: https://www.forexlive.com/centralbank/rba-small-but-rising-share-of-australian-households-in-early-stages-of-financial-stress-20231006/

Source: https://webfulnet.com/

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