Funding costs and interest rates were at historic lows, housing prices were growing at a fast pace, and concerns were centred on the potential macro-financial risks stemming from high and rising levels of household debt.
To address the building systemic risks, the Australian Prudential Regulation Authority (APRA) had announced an increase in the interest rate buffer that it expected banks to use in assessing potential borrowers. Since then, there have been a number of developments. The economy has turned out to be very resilient. Once pandemic-related restrictions were removed, the economy rebounded strongly.