Claims that Australia is suffering "mortgage stress" following the recent spate of rate rises have been rejected by the Reserve Bank, saying 99.6% of housing borrowers are up to date or ahead with their loan repayments, and the problems mostly exist in specific areas of Sydney.
The Reserve's picture of the Australian financial system is remarkably free of the sense of crisis found on financial markets. It emphasises that the banks are in very sound shape, the five main banks having made $27 billion in profits over the latest reporting year. As for borrowers, it says, "the share of households not able to meet their debt obligations is low by both historical and international standards."
It points out that most of the mortgage loans in arrears are in NSW, and even there, the problem is primarily one in western Sydney. Roughly 1% of home loans there are now arrears, compared with 0.4% in the rest of NSW, 0.3% in Victoria and 0.2% in the rest of Australia.
Despite the crisis in overseas financial markets and the impact it's had on domestic interest rates, the RBA insists Australia's economy is resilient and better positioned than many other countries.
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