SYDNEY, July 19 Reuters Australian households are generally well placed to absorb rising borrowing costs though more recent home buyers could be vulnerable with interest rates set to rise further in the months ahead, a top central banker said on Tuesday.

Reserve Bank of Australia RBA Deputy Governor Michele Bullock said households had built up around A260 billion 177.4 billion in excess savings during the pandemic and most were well ahead on their mortgage repayments.

Most also had substantial equity in the homes after steep price rises in recent years, though values in Sydney and Melbourne had begun to decline in the past few months.

I would conclude that as a whole households are in a fairly good position, to contend with higher rates, Bullock said in a speech in Brisbane, while also flagging more increases ahead.

The central bank raised rates by 50 basis points to 1.35 in early July, the third hike in as many months, and markets are wagering rates could top 3 by the end of the year.

Minutes of the RBA39;s July policy meeting showed the Board discussed the neutral rate one that is neither expansionary nor contractionary and decided the current rate of 1.35 was well below that.

The neutral rate is imprecise but has been estimated to be in a range of 23, with RBA Governor Philip Lowe often nominating 2.5 as around neutral.

Consumer price figures due next week are expected to show annual inflation accelerated beyond 6 in the June quarter, and the RBA itself…