Mish Tan

Most borrowers have continued to service their debts despite rising interest rates, while the strong labour market has underpinned income growth. However, as debt levels rise, the share of Australian mortgage holders with disposable income is dropping, according to a new report.

Recent buyers of homes are at the greatest risk of negative equity, and the rising interest rate environment increases the likelihood that some homebuyers will default on their loans. With Australia’s large cohort of new homeowners, that could lead to losses for the big banks.