- The bi-annual RBA Financial Stability Review has been released.
Key topics of interest were their assessment of the housing market, tightening lending practices, and short-term funding rates:
- Growth in the major advanced economies, and the global economy more broadly, moderated in the second half of 2018 and into 2019.
- Growth forecasts have also been revised down and there are risks of a sharper downturn.
- Risks in the household sector have increased, consumption outlook uncertain.
- Housing risks managable so far; Sydney, Melbourne prices still 30-40 pct higher than in 2012.
- Most home owners not in negative equity, would take further substantial price falls around 2.75 pct of securitised home loans are in negative equity.
- Household debt levels remain high, arrears have risen from very low levels.
- Risks from housing would increase should unemployment rise.
- Risk that coming large supply of new apartments will pressure prices.
- Australian financial system more resilient, banks have higher, more liquid capital.
- In stress tests banks can weather double-digit unemployment, house price falls over 30 pct.
- Banks may have to further raise capital ratios to meet apra, rbnz standards.
- More needs to be done by banks to limit misconduct after royal commission.
- Sees vulnerabilities in key trading partners, global financial system.
About The Financial Stability Review:
The Financial Stability Review, released by Reserve Bank of Australia, provides the Bank’s assessment of the current condition of the financial system and potential risks to financial stability. It contains a number of boxes on topics of special interest, along with occasional articles. The Review is issued half-yearly.
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