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The Reserve Bank of Australia (RBA) is out with its semi-annual Financial Stability Review (FSR), highlighting the key points, as found below.

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.