RBA FSR: Main risks from rising household debt, weak income growth

Author: Eamonn Sheridan | Category: Central Banks

Reserve Bank of Australia Financial Stability Review for October 2017

The FSR is published twice a year

Headlines via Reuters:
  • Australia's financial system remains strong and resilient
  • RBA says main risks come from rising household debt amid low rates and weak income growth
  • Higher rates, falls in income could see some highly indebted households struggle to service debt
  • Tighter lending rules have curbed investor, interest-only loans
  • Sees signs of easing conditions in housing markets in Sydney and Melbourne
  • Large pipeline of new apartments pressuring prices in Brisbane, parts of Melbourne
  • Few signs as yet of settlement problems on apartments, but watching carefully
  • Banks profitable, well capitalised, bad and doubtful debts around historic lows
  • Regulators seeking to strengthen bank accountability, risk controls given recent lapses
  • Local banks pulling back on commercial loans, Asian bank lending still growing strongly
  • Little growth in shadow banking as yet, but an area to watch
  • Risk remain elevated in china given high levels of debt, opaque borrowing
  • Concerns excessive risk taking in global financial markets risks a "disruptive correction"

I don't see anything of much unexpected nor surprising in those headlines. AUD/USD barely changed

Link to the FSR in full: Financial Stability Review