One issue that we are closely monitoring is the extent to which households choose to take advantage of lower interest rates to pay down their mortgages faster. This would be evident in an increase in loan approvals that is not accompanied by an increase in credit growth.
3. Increased risk aversion. This scenario investigates the risks arising from a global unwinding of the search for yield. It assumes an abrupt increase in investor risk aversion worldwide, which results in stock price declines and a marked increase in corporate bond spreads, thereby raising interest rates in the more risky market segments.