Assuming all fixed-rate loans roll onto variable mortgage rates and new variable rates are broadly informed by current market pricing, estimates suggest that around half of fixed-rate loans (by number) would face an increase in repayments of at least 40 per cent (Graph 11).
One factor that has contributed to the low inflation outcomes is the fall in oil prices. But a more fundamental influence has been the low wage increases in most advanced economies. In a number of these economies, including the United States, Japan, Germany and the United Kingdom, the low wage increases have coexisted with fairly strong employment growth and not-so-strong output growth.