Australian borrowers are clearly under pressure but few are at risk of defaulting on their mortgages, the Reserve Bank says.
Andrea Brischetto, head of the RBA's financial stability department, said less than two per cent of variable-rate owner-occupier borrowers were at "real risk" of not having enough income and savings to meet basic expenses or defaulting on mortgage payments.
A sharper uptick in unemployment or more interest rate rises would push this number higher, though RBA analysis suggests the bulk of borrowers would be able to ride it out.
Ms Brischetto said households were making "difficult adjustments" as higher interest rates pushed up monthly home loan repayments.
"The number of borrowers in severe financial stress has risen," she said.
"However, most borrowers have been resilient and even in the case of an economic downturn, this is likely to remain the case."
An economic growth update from the Australian Bureau of Statistics this week signalled a struggling household sector, with spending flat and the household saving ratio falling to its lowest level since 2007.
Ms Brischetto said high inflation and an assertive series of interest rate hikes had reduced households' spare income.
Most households had managed to adjust by taking on extra hours of work, spending less on discretionary items and drawing down on savings or squirrelling less away than they usually would.
These adjustments mean few households are in the later stages of financial stress, with almost 99 per cent of loans on schedule or ahead.
Also on Friday, the first update to the statement on the conduct of monetary policy was released since the Albanese government was elected.
The refreshed set of instructions reflected findings from an independent review into the key institution.
Tweaks to the way the central bank manages its dual mandate of full employment and price stability have been outlined, including a reference to the midpoint of the two per cent to three per cent target range.
"The Reserve Bank board sets monetary policy such that inflation is expected to return to the midpoint of the target," the statement says.
Some economists suggest this could have implications for the policy tightening cycle under way, with the RBA hoping to have inflation back to 2.9 per cent by the end of 2025 based on the latest forecasts.
AMP chief economist Shane Oliver said the midpoint target was paired with flexible timing that was dependent on balancing the price stability goal with its full employment objective.
He said the new focus on 2.5 per cent could be considered a "bit hawkish" considering the RBA's inflation forecasts, but would likely have a marginal impact on interest rate settings given the accompanying caveat on timing.
The statement also confirms key structural changes set out by the review, including confirmation that anonymous votes of board members will be published after interest rate meetings.
Treasurer Jim Chalmers said the statement was part of the government's commitment to maintaining a "world class" central bank.
"This work is part of the Albanese government's broader efforts to reform, renew and refocus the nation's key economic institutions," he said.
Opposition finance spokeswoman Jane Hume said it would be a shame if there needed to be more interest rate rises due to the new framing around the midpoint inflation target.
"Which is why we need to see the government do its fair share of the heavy lifting by using its fiscal levers to bring inflation back down," she told Sky News on Friday.
