RBA's Financial Stability Review to Shed Light on Household Resilience
The Reserve Bank of Australia's (RBA) Financial Stability Review is set to be published on October 1, two days after a rate rise. The review assesses risks to the stability of Australia's financial system and typically examines households, businesses, banks, non-bank lenders, and global risks.
Household resilience is a key focus due to high housing debt levels in Australia. If many households struggled to meet repayments at once, it could have a ripple effect through lenders and the economy. The RBA has already highlighted the pressure on household finances, with scheduled mortgage payments accounting for around 10% of disposable income.
At her recent media conference, Governor Michele Bullock acknowledged the strain on households, saying that 'pay packets don't go as far as they used to' and that every household has seen prices increase in recent years. Inflation remains a concern, with headline inflation at 4.0% over the year to August.
The review will examine factors such as household buffers, mortgage arrears, and housing equity. It may also identify groups of borrowers who are more vulnerable than others and assess the resilience of banks and non-bank lenders in a deteriorating household finance scenario.