Finally, the household sector as a whole has accumulated sizeable equity via higher housing prices over recent years. Rising housing prices have benefited borrowers with existing mortgages. Furthermore, the share of new borrowers that have borrowed at high loan-to-valuation ratios (LVR >  90) has declined markedly.
The combination of these factors meant that the share of loan balances in negative equity was around 0.1 per cent in May 2022, down from around 2¼ per cent prior to the pandemic (Graph 6). While housing prices have started falling in recent months, they would have to fall a fair way for negative equity to become a systemic concern.