RBA report Headlines via Reuters
- housing market is a key source of potential systemic risk, needs to be "monitored closely"
- risks in household sector from falling home prices have receded somewhat but still exist
- resilience of Australian financial system has improved
- recent tightening of lending standards has improved quality of new lending
- however, excessive risk aversion by banks can curtail credit supply
- rising unemployment, ongoing weak income growth a risk for Australia housing market, debt
- if unemployment were to rise, risks associated with negative equity would increase
- estimated share of outstanding mortgage balances in negative equity has increased to 3.75%
- households well placed to service debt; 3/4 of mortgage debt owed by households who have high capacity to make repayments
- households continue to have "sizeable" stock of mortgage prepayments at 16% of gross housing credit
- around 30% of borrowers have less than one months' worth of prepayments
- increased uncertainty about global, domestic macro outlook raises risks faced by households
- risk housing loan arrears could rise further if economic conditions weaken, home prices fall further
- challenging conditions faced by discretionary retailers, small businesses, construction firms, those affected by drought
- global uncertainties have increased since last review in April with greater chance of weak growth
- spill overs from tensions in HK, Middle east, Britain could also trigger a slowdown
- however, higher uncertainty has not resulted in investors demanding higher compensation for risks
- market pricing belies uncertain growth outlook, financial system vulnerabilities
- there are many possible triggers for dislocation in financial markets currently
- a more generalised slowdown in China could have "large impact" on Australia growth, banking system
- becoming increasingly important for investors, banks to take account of climate change risks
- climate change will have a broad-based impact on Australian banks, poses systemic risks
- climate change does not yet pose an imminent threat to financial stability
- climate change could emerge as a risk to financial stability if not "properly managed" or if climate-related losses jump materially
A useful summary of where we are at I guess.
For the full text:
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- The FSR provides the RBA's assessment of the current condition of the financial system & potential risks to financial stability. It contains a number of items on topics of special interest.
- The FSR is issued half-yearly.
