RBA: Households and Businesses Can Ride Out Slower Economy

The Reserve Bank of Australia (RBA) has released its Financial Stability Review, stating that households and businesses are well-placed to weather a slower economy and falling house prices.

According to the RBA, even if house prices fell by an additional 20%, only 5% of mortgages would be in negative equity. Less than 1% of borrowers are currently in negative equity, with household balance sheets remaining strong.

The RBA also noted that banks are well-positioned to withstand a material deterioration in the housing market. While there are pockets of stress in households and businesses, they remain resilient overall, with low loan arrears.