Recent commentary from major lenders has highlighted concerns around rising bad debts and the potential flow-on effects of global instability and cost pressures across the Australian economy. While the broader market outlook remains uncertain, borrower behaviour is already beginning to shift in response.
Adele Andrews, Director at Australian Property Home Loans, says that while stress levels are not yet showing through in bad loan figures, conversations with clients are becoming more forward-focused.
“At this stage, we’re not noticing a lot of bad loans,” Adele says. “There are plenty of conversations around the cost of living, and I have started preparing my clients for future headwinds, given the downstream implications of fuel costs.”
She notes that key sectors such as agriculture, beef and construction are likely to face increased pressure, particularly as living and operating costs remain elevated. For clients undertaking renovations or building projects, careful financial planning is becoming increasingly important.
“For now though, the mortgage holders I am speaking with are doubling down on their budgets and preparing for the worst,” she says. “In many cases, they are consolidating debt to make way for cash flow.”
Adele also expects this behaviour to become more common among small business owners, with growing interest in refinancing and restructuring debt into more manageable arrangements.
“I expect to see more of this from small business owners; a genuine appetite to refinance their business debt into a more manageable structure that takes pressure off their cash flow.”
While domestic pressures such as interest rates and cost of living remain key drivers, Adele believes global instability is now an equally important factor shaping sentiment.
“My biggest concern personally is how the global instability and fuel crisis will fully impact Australia,” she says. “That full impact is yet to be felt and the lag effect is going to potentially have upward pressures on both inflation and rates. It could be a pretty rough year.”
Read the full article here from Australian Broker.
