RBA Warns of Global Shocks While Highlighting Domestic Mortgage Resilience in Financial Review

The Reserve Bank of Australia warned in its Financial Stability Review that external shocks, including an AI boom reversal, pose primary threats to domestic stability. However, Australian households and lenders remain resilient despite elevated borrowing costs following a recent 25-basis-point rate hike to 4.6%. Fewer than 1% of domestic mortgage holders are currently in negative equity even after home prices recorded their sixth straight monthly drop in September. The RBA estimated that an additional 20% decline in home prices would leave only around 5% of mortgages in negative equity.