(Bloomberg) -- Higher interest rates and inflation in Australia mean an increasing number of mortgage-holders are facing severe financial stress, though most households remain resilient, a central bank official said.
“The vast majority of borrowers remain able to cover expenses and service their loans,” Andrea Brischetto, the Reserve Bank of Australia’s head of financial stability, said Friday in a speech.
Households have responded to the pressures on their budgets by curbing spending, seeking to boost earnings by working longer hours or chasing higher wages, as well as by tapping some of the large pools of savings built up during the pandemic, Brischetto said.
About 95% of Australians who hold variable-rate mortgages on their homes still have spare income after meeting their mortgage payments and essential expenses, the RBA estimates, based on its own securitization system data and on the Melbourne Institute’s estimates of essential spending needs. Less than 2% of all such borrowers have both an income shortfall and low savings buffers, and are therefore at risk of falling into severe financial stress.
RBA Says Share of Borrowers in Early Financial Stress Is Growing
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