Figures released last week by the Reserve Bank of Australia (RBA) and the Australian Bureau of Statistics (ABS) reveals that Australian households are repaying consumer debt at a furious pace.
According to the RBA, the outstanding stock of personal debt fell by 12.3% in the year to February 2021, which follows 45 consecutive monthly declines:
The stock of Australian personal debt continues to shrink.
The ABS’ lending indicators told a similar story with annual new personal finance commitments falling to a record low $30.9 billion in February 2021, down 18.3% year-on-year and 44% below the historical average of $55.3 billion:
Aussies are taking out personal loans at the slowest rate ever.
In fact, the only category where households are still accumulating debt is with respect to new mortgage commitments, which are running at historically high levels:
New mortgage commitments are being taken out at a record fast past.
However, even here Aussie households are repaying existing mortgages at a furious pace, which has kept the overall growth in outstanding mortgage debt at low levels:
Mortgage growth remains at historically low levels because Aussies are also repaying existing mortgages at a furious pace.
The above data illustrates why record low interest rates may not result in an increase in household debt relative to incomes or GDP, since repayments of mortgages and personal debt is largely offsetting record strong issuance of new mortgages.
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