Credit crisis not over yet

In its latest review of the financial system the Reserve Bank of Australia has said that the relative calm in money markets over the past few weeks may not last. The report said that the cost of credit remains high so lenders are either absorbing the increased cost or passing it on to consumers, although standard rates for prime mortgages have not moved up yet. While most borrowers are positive about their personal finances according to the report there are pockets of Australia, particularly western Sydney where this was not the case. One indicator of the financial stress being felt is a 75 per cent increase in the value of superannuation policies being redeemed early. Analysis conducted by the RBA identified regions in NSW, Victoria and Queensland where mortgage repayments are taking more than 30 per cent of household income but in western Sydney there are areas where this figure is over 40 per cent.

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