RBA's Kent: fallout from interest-only loan expiries to be limited
|The Reserve Bank of Australia's Assistant Christopher Kent gave some talking points about the interest-only loan lending practices in Australia, which the Australian regulator Australian Prudential Regulation Authority (ARPA) restricted to protect household debt levels.
Key highlights
Expects almost half a trillion (in AUD terms) of interest-only loans to expire by 2021.
Majority of borrowers have transitioned out of interest-only loans well.
Small minority of borrowers who cannot afford the step-up into principal plus interest payments.
Kent expects the overall impact of transition on household cash flows and thus consumption to be small.
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