sydneyrecord low interest rates have contributed to higher house prices creating the potential for excessive borrowing the reserve bank of australia said friday in a report card on the stability of the countrys financial sector low interest rates have contributed to high prices for financial assets and housing there has been some increased risktaking and higher borrowing the rba said vulnerabilities can increase if housing market strength turns to exuberance with borrowers taking on greater risk given expectations of further price rises and banks potentially easing lending standards it said the warning about the frothy housing market comes after the australian prudential regulation authority this week tried to put a brake on house prices which are on track to increase by more than 20 this year on wednesday apra increased the interestrate buffer used to assess loans a move that will reduce the borrowing capacity for new borrowers more broadly the rba said asset prices were strong despite the pandemic and a retreat in financial markets was likely if interest rates were to rise in response to the reemergence of inflation pressures globally price falls could be widespread if interest rates were to increase sharply due to unexpected inflation or rising risk premiums or if there are extended falls in output it said the rba has held the official cash rate at a record low 010 since late 2020 rba governor philip lowe has repeatedly said that the cash rate is likely to remain unchanged until 2024 the promise of low interest rates for that period of time has helped fan the boom in house prices mr lowe has also explicitly ruled out using interest rates to tame house prices