Five per cent of the nation’s home borrowers are facing a “particularly challenging situation”, Reserve Bank governor Michele Bullock has revealed, saying some may have to sell their homes to stay financially afloat.
Bullock, speaking in Sydney this afternoon, said lower-income Australians were over-represented among the group of people struggling under the weight of high inflation and high interest rates, with some likely to dip into their savings or buy lower-quality goods to help make ends meet.
Reserve Bank governor Michele Bullock.Credit: Alex Ellinghausen
But she has stood by the bank’s current interest rate settings, arguing that inflation pressures – particularly in the home construction sector, rents and insurance – continued to be high in some parts of the economy.
GDP figures released yesterday revealed the economy barely grew through the June quarter with annual growth up just 1 per cent, its worst performance outside the COVID pandemic since the 1990-91 recession.
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Bullock said lower-income earners were over-represented among the group of people who were “really struggling” in the current financial climate.
“Although this group is fairly small overall, those in it have had to make quite painful adjustments to avoid falling behind on their mortgage repayments,” she said moments ago.
“This includes things like cutting back on their spending to the more essential items, trading down to lower quality goods and services, dipping into their savings or working extra hours. Some may ultimately make the difficult decision to sell their homes.”