Home loan holders pushing boundaries
ONE in three home loan customers are leaving themselves with little to no buffer on their repayments despite interest rates resting at record lows.
The Reserve Bank of Australia released its biannual Financial Stability Review yesterday, revealing a third of mortgages had less than a one-month buffer.
Despite this, many other borrowers have significant piles of cash either overpaid on their loans or sitting in a redraw account.
The review found aggregate mortgage buffers were at about 17% of outstanding loan balances or more than 2.5 years ahead of scheduled repayments at existing interest rates.
The cash rate has sat at 1.5% since August last year and industry experts say a move is not likely until next year.
The review also shows the Australian Prudential Regulation Authority’s move to tighten standards for housing loans is working and has helped ease the nation’s overheated property market.
The RBA reiterated that key risks to the country’s financial system stemmed from high levels of household borrowing but said growth in riskier types of lending had eased.