Australia’s shrinking mortgage repayment burden

The Bank for International Settlements (BIS) has released its global household debt statistics for the June quarter, which reveals that Australian households remain the second most indebted in the world and easily the most indebted among English-speaking nations:

Australia also has the third highest debt repayment burden out of sampled nations and by far the highest debt burden in the English-speaking world:

That said, Australia’s debt repayment burden has fallen to its lowest level since September 2004, despite dwelling values running near an all-time high relative to incomes:

The reason is obvious: average mortgage rates have cratered to all-time lows, namely 3.65% variable and 2.20% 3-year fixed:

Expect the repayment burden to fall further as borrowers pivot to fixed mortgages. Those rates are too low to ignore.

Unconventional Economist


  1. “ANZ Bank NZ today announced it would require a 40% deposit from residential property investors as a step to bring balance to the housing market.”

    • (PS: John Key, ex-NZ PM who in 2007 campaigned on “Homes are generally too expensive” ( or words to that effect), and got elected, only to back-track on that ‘promise’ but is now Chairman, ANZ NZ ( and on the Board of ANZ parent in Oz). Jacinda Ardern, current PM, likewise campaigned on “Homes are generally too expensive” and similarly back-tracked after her ascension.
      Could it be that in the absence of any politically possible way of addressing the unaffordability issue ( the FIRE bods scream blue murder at any and every chance at the spectre of any change to the status quo) that behind the scenes the two have decided to tackle the problem in another way?
      Let’s hope so. But I won’t hold my breath!)

      • Jumping jack flash

        Their premise was amiss and it is no wonder they backtracked. There is no such thing as “unaffordability” in the age of debt and the New Economy. There is only ineligibility for the correct amounts of debt to be able to afford something.

    • Jumping jack flash

      40%? Fortunately it is for investors only.

      For everyone else the deposit percentage (or AKA the ponzi buy-in fee) has to move towards 0. It is simple maths: as debt volumes head to infinity over time, so will deposits at any percentage greater than 0.

      Even the currently perceived low amount of 5% will be far too high in a few short years while house prices double every 7 – 10.
      By 2050 when median house prices are hovering around the 10 million mark, 5% will take more than 50 years for the median person to save up, without using an enormous pile of someone else’s debt to get them started.

      unless of course the debt engine restarts very soon and we get some serious inflation.

  2. Jumping jack flash

    As you point out, the debt burden is shrinking due to falling interest rates. It is a marvelous thing.
    What is most important though is the volume of new debt created. This has to accelerate by a fair amount.

    But due to the wonders of the carefully engineered New Economy, since most of the new debt magicked up and attached to houses will be used to repay existing debt attached to houses, the volume of outstanding debt needn’t increase all that much, and therefore the perceived risk won’t rise.

    However, the outstanding debt needs to rise a bit, and this is probably the part that is used to inflate prices, and then wages, by my reckoning.

  3. If fixed rates were to become more common than variable rates how would that affect the property market going forward? Are the days of variable coming to an end?