The nation’s top financial regulators have revealed inflation and interest rates are driving up the number of people falling behind on their mortgages or going into insolvency.
The Council of Financial Regulators, which includes the Reserve Bank, the federal Treasury, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission, this morning reported details of its latest meeting.
In a statement, it said it appeared financial risks to the Australian financial system from lending to business and households remained contained. But there were growing tensions across the economy.
Treasurer Jim Chalmers.Credit: Alex Ellinghausen
“While budget pressures from inflation and interest rates continue to be widely felt, with many households making adjustments to their finances, most borrowers have continued to meet their debt repayments,” it said.
“Members observed that the share of borrowers falling behind on mortgage payments has continued to rise, as have financial hardship applications, but from a low level.”
The council also revealed after a period of low insolvencies during the Covid-19 pandemic, they were now starting to pick up.
Treasurer Jim Chalmers said higher interest rates were a key reason why the economy was soft and people felt under financial pressure.
He said last month’s budget, which confirmed the upcoming stage 3 tax cuts plus $300 energy rebates for households and small businesses, was aimed at helping people deal with those pressures.