Reserve Bank governor Phil Lowe has sounded a warning to the nation’s lenders to maintain borrowing standards given soaring house prices while dampening expectations of strong wages growth in the wake of the coronavirus pandemic.
Those low interest rates have driven a surge in house prices and household debt. Data this week showed thein NSW has now surpassed $1 million, climbing by $115,000 in the past 12 months while in Victoria it has reached $835,000. The Council of Financial Regulators, which includes the RBA, Treasury and the Australian Prudential Regulation Authority, met last week to discuss the issues that could arise if household borrowing “sustainably outpaced growth in household income”.He said there had been no “upside surprises” to wages growth which the RBA is hoping to drive well above 3 per cent so as to lift inflation.Even where businesses were struggling to find workers, wage increases were “mostly modest”.
Source: Loan Digest (loandigest.net)