The Reserve Bank of Australia doesn’t think an interest rate rise will have a detrimental impact on borrowers across Australia.

RBA assistant governor for economics Luci Ellis told a parliamentary hearing that most people pay more off their mortgage than is required, particularly recently as many households have been spending less during Covid lockdowns.

She says people often put that money into offset and redraw mortgage accounts, so if rates do eventually rise they won’t have to raise their repayments because they have already paid off more than they needed to.

While she doesn’t think there is an overall shortage of housing in Australia, Ellis says there are some things that can be done to make the market more responsive.

“These include speeding up planning systems to reduce general inefficiencies, improving transport infrastructure and lowering the cost of new construction.”