The Reserve Bank of Australia’s (RBA) latest Financial Stability Review (FSR) provides some concerning statistics around the vulnerability of Australian mortgage holders. Therefore, “some borrowers on fixed rates could be at higher risk of entering financial stress when their mortgage payments increase”. The RBA’s scenario analysis indicates that, based on its baseline forecasts, 15% of variable rate owner occupier borrowers would have negative cash flow (i.e. The RBA’s cumulative rate hikes have slashed borrowing capacity by 30% and lifted variable mortgage repayments by around 50%, according to Canstar. APRA’s 3% mortgage serviceability buffer also means that borrowers are being assessed at an average variable rate approaching 9%, which has trapped many in their existing loans.

Source: The Guardian April 12, 2023 23:57 UTC