RBA say Australians rein in borrowing
In a statement on the overall health of the country’s economy, the bank said that households are taking on credit cards and loans at a slower rate than has been seen for some time.
This, it claimed, is because homeowners have seen their budgets squeezed by the dual problem of falling house prices and declining equity locked up in vehicles such as managed funds and superannuation.
“Overall, [these declines mean] that household wealth has fallen significantly since the end of last year and this is likely to be contributing to the overall moderation in consumer spending,” the Bank said.
It said the main problem to overcome now that the shockwaves of the banking crisis have passed will be making sure inflation comes down while allowing Australians to carry on spending in order to support the economy.
Furthering this, at its last monthly meeting the RBA decided to chop 75 basis points off the base rate, paving the way for lenders to reduce home loan rates again after last month’s 100 point rate cut.