Macroeconomic Commentary – October 2025 Financial Stability Review
At La Trobe Financial, our products are built on fundamentals that perform across all market conditions – whether volatile or calm. That’s the strength of a disciplined, cycle-aware investment philosophy.
As a conservative lender with deep experience across market cycles, we closely monitor macroeconomic trends to inform prudent decision-making. But our resilience doesn’t hinge on the environment – it’s embedded in our approach.
The Reserve Bank of Australia’s latest Financial Stability Review highlights easing financial conditions and evolving risks. These insights are valuable, but they don’t change our core proposition:
- Households benefit from improved cash flows and rising real wages, and our lending standards ensure they’re supported even in tougher times.
- Businesses face sector-specific pressures, with our credit assessments and risk management insulating investors regardless of the cycle.
- Investors can rely on the quality of our loan portfolio, with proven resilience delivering consistent returns – not because the economy is stable, but because our fundamentals are.
We build portfolios that perform across market cycles. Whether financing a family home or supporting business growth, our approach ensures borrowers thrive and investors are protected.
From household resilience to commercial real estate fundamentals and the rise of private credit, the macro landscape is shifting. But La Trobe Financial remains steady – not because conditions are easy, but because our model is built to endure.
RBA Financial Stability Report
Summary:
Households and Businesses
Household financial stress is easing, supported by lower interest rates, inflation, and rising real wages. Only around 2% of variable-rate borrowers are currently stressed, and most households retain strong savings and equity buffers. Business insolvencies are normalising, especially in construction, retail, and hospitality, but broader financial system risks remain low. Larger firms maintain solid balance sheets, while smaller firms face more pressure. Credit access is robust, with sound lending standards under close watch.
Commercial Real Estate (CRE)
CRE fundamentals are stabilising, with office valuations improving. Financial stress among CRE owners is low, and loan performance remains sound. Foreign investment is strong, though risks from looser lending standards are emerging, particularly in lower-grade office assets.
Private Credit
Private credit is expanding as an alternative funding source for businesses with limited bank access. While systemic risk remains low, regulators are monitoring the sector closely due to data gaps and visibility concerns.
Investor Takeaway
Economic conditions are easing, and financial resilience is improving across households, businesses, and CRE. However, pockets of vulnerability persist, and maintaining sound lending standards will be key to preserving financial stability.
Any advice is general and does not consider your personal circumstances.
Past Performance is not a reliable indicator of future performance.
La Trobe Financial Asset Management Limited ACN 007 332 363 Australian Financial Services Licence No. 222213 is the responsible entity of the La Trobe Australian Credit Fund ARSN 088 178 321,the La Trobe US Private Credit Fund ARSN 677 174 382 and the La Trobe Private Credit Fund ARSN 686 964 312 (ASX:LF1). It is important that you consider the relevant Product Disclosure Statement (PDS) before deciding whether to invest or continue to invest in the fund. The PDSs and Target Market Determinations are available on our website.
