Risks include China property sector, a disorderly fall in global asset prices, exposure to commercial real estate.

Tightening in global financial conditions could slow growth, lift unemployment.

Fall in global asset prices could raise funding costs in Australia, limit supply of credit.

Australian financial system sound, some pockets of stress among household borrowers.

Australian banks well capitalised, have low exposure to commercial property.

Banks well positioned to manage any increase in mortgage arrears, absorb loan losses.

Small, but rising share of households in early stages of financial stress.

Most borrowers well placed should interest rates rise further.

Most borrowers also well placed to cope with extended period of high rates.

Any increase in unemployment would add to stress, but unlikely to threaten system overall.

Risks posed by non-bank institutions in Australia remain low.