Home loan hold­ers push­ing boundaries

Daily Mercury - - NEWS | NATION - – So­phie Elsworth

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.

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