Key Facts:
– The Reserve Bank of New Zealand (RBNZ) states that the country’s financial system appears robust and well-positioned to face potential challenges.
– The vulnerability in the system lies in mortgage holders who are highly exposed to high interest rates.
– Kiwi borrowers have high levels of debt relative to their income, and they tend to fix their debt at short durations, making them more sensitive to interest rate changes.
– While mortgage holders are currently meeting their repayment obligations, problems could arise if unemployment increases or financial conditions tighten.
– New Zealand households have about $170 of debt for every $100 of disposable income.

Article Summary:
According to the Reserve Bank of New Zealand, the country’s financial system seems to be in good shape despite the vulnerabilities posed by mortgage holders. Kiwi borrowers have high levels of debt and tend to fix their debt at short durations, making them highly exposed to high interest rates. Despite this, mortgage holders are currently meeting their repayment obligations. However, the system could face challenges if unemployment rises or financial conditions tighten. The RBNZ highlights that New Zealand’s financial system is faring similarly to other advanced countries, although risks are still emerging.

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