The Reserve Bank has warned borrowers will face tough conditions for the rest of the year, forcing more to cut their spending or even rely on charity, before higher wages and interest rate cuts finally provide some relief in 2025. In its six-monthly examination of the state of the financial system , the bank said one-in-20 borrowers were in negative cash flow as they struggled to repay their mortgage, but the rest were finding ways to make ends meet.
Real disposable income per person has fallen by 7 per cent since early 2022, when the RBA started lifting interest rates, in effect wiping out the gains most households had enjoyed due to pandemic-era government stimulus, low inflation and record-low borrowing rates., saying the economic and inflation outlook was balanced in comments analysts interpreted to mean more rate rises were off the RBA’s agenda. But that changed afterwas just 0.2 per cent while in per capita terms the economy has been in recession for the past nine months.In its financial stability report, the Reserve Bank admitted that higher interest rates on top of inflation and a growing tax take were making life difficult for many borrowers, but said it would come to an end. “Much of this year will remain challenging for borrowers already under pressure. The expected decline in the share of borrowers with a cash-flow shortfall only occurs later in 2024,” it sai
Reserve Bank Borrowers Tough Conditions Spending Charity Relief Wages Interest Rate Cuts Financial System Negative Cash Flow Mortgage Disposable Income Pandemic-Era Government Stimulus Inflation Borrowing Rates Economic Outlook Inflation Outlook Recession Financial Stability Tax Take Cash-Flow Shortfall
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