Even if distinct factors could be separately associated with the two types of risk, the factors often interact significantly in determining asset values, and therefore risk measurement and management needs to explicitly account for their joint influence.
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.