Australia’s banking regulator has stated that it will not ease the interest rate buffer requirements for borrowers despite more homeowners being subject to mortgage stress.
This comes as a significant number of borrowers will see their cheap fixed-rate home loans, which were acquired before the central bank started the interest rate hiking cycle in May 2022, expire by the end of this year.
According to the Reserve Bank of Australia (RBA), one-quarter of fixed-rate loans outstanding in early 2022 has already expired, while another 40 percent will lapse by the end of 2023 and the remaining 20 percent by the end of 2024.
The RBA expected most of the fixed-rate loans to roll on to much higher variable interest rates that carried the full weight of its cash rate hikes….