In a speech, RBA Deputy Governor Michelle Bullock said households are in a “fairly good position” for interest rate increases. It’s “unlikely” that there will be substantial financial stability arising from the household sector, but risks are “a little elevated”.
The household sector has “large liquidity buffers”, with “substantial equity” in housing assets. Much of the debt is held by “high-income households” while low fixed rate loans have give time for preparation for high rates. But rate hikes could impact households’ debt servicing burden and cash flow. Risk play out will also be included by future path of employment growth.
“This, along with the Board’s assessment of the outlook for inflation, will be important considerations in deciding the size and timing of future interest rate increases,” she concluded.
