 Australian households service debts well
Financial deregulation and structural declines in interest rates are the main factors pushing many Australian households in greater debt service, according to the Reserve Bank.
But while evidence suggests increased levels of debt have not left Australian households over-exposed, pockets of stress remain, RBA deputy governor Ric Battellino said.
According to Battellino all countries have experienced increased in household debt ratios for many years and which means the forces that drove the climb in household debt ratios are not distinct to Australia.
"From 1985 to 1995, the average cash rate in Australia was 11.4 %, while between 2000 and 2010 the average is 5.3 %. The current cash rate is 4.5 per cent after a total of six rate hikes from October 2009."
Moreover, housing stress in south-east Queensland and Western Australia is said to be aggravating subsequent to fast increase in house prices in the areas. According to Battellino, despite increased levels of debt, Australian households are servicing it well.
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