Westpac agrees with the RBA that the vast majority of its customers can cope financially with the interest rate rises.

Chief executive of consumer and business banking, Chris de Bruin, says the chances of widespread mortgage stress this year are low.

He says customers and businesses were well prepared for rates to lift above what are abnormally low levels.

“Even (the official rate) at 1.5% we are still talking about very, very low interest rates,” de Bruin says.

“I think the important thing to recognise is that we’ve been through a long period of ultra-low interest rates, so this is a natural reversion to some degree.”

He thinks future increases will be steady and affordable to most Australians, although he admits there may be hardship for some borrowers “at the margin”.

Household spending is strong, businesses are generally confident and both consumers and businesses can handle higher rates as it was never going to remain so low for ever.