Borrowers can afford increases, says Westpac

“I think the important thing to recognize is that we’ve been through a long period of ultra-low interest rates, so this is a natural comeback to some extent,” he said.


“Money would never be free forever, and most companies we were talking to knew that. And what we’ve seen people do during COVID times, in particular, is work very hard to strengthen their own resilience.

Westpac will release a new survey of more than 500 small businesses on Monday, which suggests the rising cost of living is the number one concern for small businesses, followed by worries about inflation, rising rates and disruptions to the COVID-19.

Most businesses thought the economy would rebound more in the next year, but de Bruin said one area that could slow was discretionary spending, such as at restaurants.

“We had a small boom in the hotel industry, which went well. We see that holding up, but some of the heat may come out of it as the cost of living goes up. So that’s the part to watch,” he said.

As mortgage lending slows, business lending is a critical battleground for banks, and Westpac is announcing a partnership with accounting giant MYOB this week that will give eligible bank customers access to accounting software. .

While banks have generally played down the potential for mortgage stress, Australian Prudential Regulation Authority chairman Wayne Byres said last week that people who took out ultra-cheap fixed-rate loans could face “reimbursement shock” and said falling house prices could make it worse for some borrowers.

Bad debt risk has also emerged as a concern for bank investors, although recent research by Citi’s Brendan Sproules has argued that big banks still have excess provisions to withstand a “reasonably significant deterioration” in the economy. .

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