Concerns loom for the recent home buyers who borrowed at rock-bottom fixed interest rates and will face higher mortgage repayments when they refinance next year.
Nearly a quarter of new loans were considered risky at the height of the recent property boom.
But concerns loom for the recent home buyers who borrowed at rock-bottom fixed interest rates and will face higher mortgage repayments when they refinance next year.During the property boom, almost a quarter of new home borrowers were taking on large debts of six times their incomes or more. “At the time there was a feeling that the central bank should raise interest rates, but it was seen as premature,” Oliver said, adding these other tools were considered to take heat out of the property market.“Things moved fairly quickly and we moved towards a big rise in interest rates, and so that’s been doing the job for them, they haven’t had to do more macroprudential controls.
Now, the biggest risk in the eyes of the regulator is not today’s borrowers, who cannot borrow as much because they face higher interest rates. He said unemployment is still low, meaning the regulator may not be overly concerned right now, but this could change if unemployment starts to rise.
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