The fastest and longest series of interest rate rises in Australian history is not putting strain on IMB Bank borrowers, yet.
The Wollongong-based member owned financial institution released its results for the 2022-23 financial year and CEO Robert Ryan said its customers were burning through a savings buffer built up during COVID and were not yet showing signs of repayment stress.
"It's been a very difficult period," he said. "What we have seen though is not a real change in hardships or arrears."
With many customers moving from low fixed interest rates that were set before interest rates began to rise to variable rates in a high interest rate environment in the past six months, Mr Ryan said there was not yet evidence of a mortgage cliff, where a mass of borrowers were unable to make their repayments.
"We're fairly conservative around our servicing and lending, making sure people can service their loans," he said.
On Tuesday, the RBA held off on adding further pressure to mortgagees and Mr Ryan said Illawarra homeowners could look to a lightening of the load in the year ahead.
"Hopefully we don't see the RBA increase rates anymore, now that we've hit the top of the cycle, and hopefully in the next year, we will see rates come down."
Despite the rise in interest rates and rapid growth in house prices, IMB Bank saw more people take out a loan in 2023 and this drove the bank's net profit result of $36.3 million, an increase of 23.1 per cent on the previous year, along with more deposits.
"The growth in our customer base and our balance sheet, helped contribute towards that [result]," Mr Ryan said.
The company was also able to lower costs, however did so without closing branches, as other major financial institutions have done in the Illawarra. Mr Ryan said the bank was able to do this by enabling staff in branches to serve customers digitally, wherever they may be, while maintaining the same physical footprint and face to face service.
"You could be down on the South Coast and still be dealing with people in the Illawarra, or with people up in Newcastle. That's made us more productive."
Having reached the peak of the interest rate cycle, Mr Ryan said the Illawarra had solid foundations to build upon in the next 12 months, with record low unemployment, and house price growth would moderate after large peaks and troughs during and after the COVID pandemic.
"We don't want to see house prices drop, what we would like to see is a steadiness in that growth over a period of time, rather than big spikes."
While borrowers were continuing to meet their repayments, this has eaten into other areas of spending, with retail trade diminished in the Illawarra, but Mr Ryan predicted a so-called soft landing for the region's economy even with uncertain economic times ahead.
"If we can see an avoidance of a recession, and we have hit the top of the interest rate cycle and inflation coming down, I'm quite optimistic. It's tough but [businesses] seem to be quite resilient in trading their way through."
Sign up for our newsletter to stay up to date.