Household debt seems 'quite high', says RBA

Thursday 07 October 2010

Article by Mozo

Rising household debt is preventing some people from paying off their mortgages ahead of time, a Reserve Bank (RBA) official has said.

In a speech to the CPA Australia conference in Brisbane, RBA head of financial stability Luci Ellis noted that while the bank has witnessed a levelling off in the household debt to income ratio, that debt remains high, the AAP reported.

"Household debt in Australia has come up quite a lot and does seem quite high," she said.

"A lot of that increase in debt more recently has been in older households. So instead of paying off their mortgage by 45, they've still got one at 55."

Aussies struggling with debt and mortgage repayments could opt to compare home loans before refinancing. Dr Ellis made the comments while warning of the dangers of a housing bubble if investors buy up rental properties on the sole expectation of capital growth.

Last week, the RP Data-Rismark Hedonic Australian Home Value Index showed that home prices were down by 0.2 per cent in August.

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