The RBA identifies several external risks that could impact financial stability, including high and rising government debt levels in major economies, stretched asset valuations, and heightened geopolitical tensions. Despite these challenges, the Australian financial system remains well-positioned to navigate potential disruptions.
Key findings from the review include:
- Most households with mortgages are keeping up with repayments and have built savings buffers.
- Many businesses have established financial buffers, enhancing their capacity to withstand economic shocks.
- Australian banks continue to maintain high levels of capital and liquidity, positioning them to support the economy through potential disruptions.
For borrowers, particularly those with existing mortgages or seeking new loans, the RBA's assessment provides reassurance about the stability of the financial environment. Maintaining prudent financial practices, such as building savings and managing debt levels, remains essential in navigating any future economic uncertainties.
Financial institutions are encouraged to continue their focus on sound lending practices and risk management strategies. The RBA's review serves as a reminder of the importance of maintaining robust financial buffers and being prepared for potential external shocks.
In summary, the RBA's October 2025 Financial Stability Review highlights the strength and resilience of Australia's financial system. While acknowledging external risks, the report provides confidence in the nation's ability to withstand global economic challenges and maintain financial stability.
