ANZ chief executive Shayne Elliott warned the bank expects more borrowers to struggle to pay their mortgages.
The Reserve Bank’s 13 interest rate hikes in 2022 and 2023 have seen borrowing costs rise at the most aggressive pace in a generation.
Elliott said he expected things to get worse, even if the level of mortgage defaults remained low.
“Still, we expect the number of people under stress to increase slightly,” he said on Tuesday when presenting ANZ’s half-year results.
The Reserve Bank is widely expected to leave interest rates unchanged on Tuesday, with the futures market pegging an increase at an eight per cent chance.
ANZ chief executive Shayne Elliott warned the bank expects more borrowers to struggle to pay their mortgages.
The cash rate is already at a 12-year high of 4.35 percent, but underlying measures of inflation that exclude volatile price movements are above 4 percent, levels well above the 2 percent target. at 3 percent of the RBA.
This has caused the interbank 30-day futures market to rule out any rate cuts in 2024 and instead expect relief to be delayed until August 2025.
Borrowers have already endured the most aggressive pace of monetary policy tightening since 1989, causing variable mortgage rates to soar 68 percent for homeowners with a 20 percent deposit.
But Elliott said most borrowers were coping.
“Despite the stress, there is still resilience and people are being very prudent in the way they manage their money,” he said.
“The reality is that banks are in a really strong position to help those customers who find themselves in a difficult situation.”
