Reserve Bank of Australia assistant governor for financial markets Christopher Kent said these two temporary features of the borrowing landscape were complicating the task of lifting interest rates to temper economic activity and slow inflation.
The RBA has lifted interest rates 10 times from historic lows of 0.1 per cent to 3.6 per cent to push inflation back within its two-to-three per cent target range.
The proportion of fixed housing credit peaked slightly above 35 per cent in early 2022, well above the average of about 20 per cent before the pandemic.
So far, about 10 per cent of fixed housing credit has expired - about 590,000 loans - with half the remaining fixed-rate loans due to roll off this year - about 880,000 loans.
The sudden exposure to higher repayments is expected to weigh on households, although Dr Kent said there was more to the story.
He said it was possible, though not particularly likely, some mortgage holders may start adjusting their spending and budgeting behaviour in anticipation of being bumped onto higher variable rate loans.
Savings buffers are the other major uncertainty hanging over monetary policy lags, with borrowers building up substantial buffers in their offset and redraw accounts during the pandemic.
He said it was also unclear how households would manage their savings buffer, with one possibility borrowers run down their buffers and keep spending elevated for some time.
Households could also hold onto their additional buffers, or at least run them down gradually over a much longer period, with higher interest rates creating an incentive to save more and pay mortgages down quickly.
Dr Kent said while the high proportion of fixed rate loans and sizeable buffers held by many borrowers would most likely drag out the time it would usually take for higher interest rates to weigh on household spending, other channels of monetary policy were behaving as normal.
For example, higher interest rates are cooling demand for new housing loans and making it more attractive for firms to save rather than invest.
"In short, all of these other channels of monetary policy are helping to slow the growth of aggregate demand and bring down inflation," he said.
A new Business Council of Australia report has found an enduring weakness in business investment that's not solely a product of the cyclical slowing in economic conditions
The report pointed to structural barriers to investment spending that were preventing long-term growth in productivity and wages.
Business Council chief executive Jennifer Westacott said Australia was in an "investment drought" that was preventing the nation from prospering from big economic shifts, such as decarbonisation and digitisation.
"Business investment matters because it fuels innovation and expansion, it's what gives businesses the capacity to do new things, pay workers more, and prepare for the future," she said.
Several recommendations were offered to boost business investment, including a broad-based, permanent investment allowance.
