The Reserve Bank of Australia (RBA) has released its debt ratios for the December quarter, which revealed that Australian households’ debt loads have hit another all-time high.
The ratio of household debt to disposable income hit 189% in December:
As expected, this increase has been driven by surging mortgage debt, where the ratio hit a record 139% of disposable income:
Mortgage debt also hit a record high 96% of GDP in the December quarter:
The only saving grace is that the recent cratering of mortgage rates means that the ratio of mortgage interest payments (not principal) was only 7.2%; although it is still significantly (16%) above the 6.2% recorded when mortgage rates peaked at 17% in September 1989:
A version produced by the BIS that includes principal repayments – called the Debt Service Ratio – shows that Australian household debt repayments are way above other Anglosphere nations, but below the pre-GFC peak:
The primary reason why mortgage repayments remain so high, despite cratering mortgage rates, is because Australian housing values have hit 525% of annual household disposable incomes – almost double early-1990s levels:
The data confirms that Australia is at the very top of most indebted households in the world.
