ABC Business reports that the Reserve Bank of Australia's latest Financial Stability Review says the main threats to financial stability come from overseas, not from the housing downturn. The review was released two days after the RBA raised its cash rate to a 15-year high of 4.6 per cent. The RBA Monetary Policy Board will announce its next rate decision on 3 November.
The RBA estimates that less than 2 per cent of variable-rate owner-occupier borrowers had a cash flow shortfall at the end of June. It expects this might rise to 2 per cent or slightly above in coming months. It also warned about borrowing to fund the AI boom and a possible disruptive sell-off in bond markets.
What it means
- The RBA expects the share of borrowers who cannot cover repayments and essential costs to rise a little, as the cash rate has risen once since June and markets expect it may rise further.
- The RBA says less than 1 per cent of borrowers are in negative equity. It estimates a 20 per cent fall in house prices would put around 5 per cent of mortgages in negative equity.
- The review says low risk premia have kept financial conditions buoyant for businesses. The RBA warned these premia could move sharply higher after an adverse shock, which would affect business credit conditions.
- The RBA does not expect the housing downturn alone to threaten financial stability, but it describes the downturn as threatening to be the worst in decades.
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- RBA relaxed about housing downturn, deeply worried by AI and bonds — abc.net.au, read 2026-10-02