Rising rates hit lower income borrowers hardest while wealthier households have buffers
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Interest rate rises are hitting lower income borrowers hardest, with some experiencing negative cashflows. But wealthier households have more buffers.
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About 30% of borrowers with negative cashflow may deplete savings within 6 months. Gen Z cutting back more than older generations.
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Household wealth has increased during pandemic, but savings unevenly distributed. Most stashing cash in mortgage offsets.
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Geography matters - mortgaged households concentrated in outer suburbs and regions. But arrears still low so far.
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RBA faces challenge - blunt tool of rates impacts people differently. Seeking to cool demand without causing too much pain.