RBA warns against increasing household debt

Mozo

Wednesday 27 March 2013

The RBA is urging Australians to stay on track with paying down debts, increase savings accounts and stay away from the low home loans major banks are dangling in front of them, according to a report by the News Limited Network.

RBA warns debt is still higher than savings.

The Reserve Bank's latest global financial stability review warns that while the global economy is showing signs of recovery, instances such as Cyprus show that it has not yet reached the all clear with many challenges still lying ahead.

"Housing loan arrears rates have continued to improve across most parts of the country and other indicators of household financial stress remain low," the RBA report said.

The prudent approach to family finance has seen the average household net worth rise to around $721,000 since the 2008 low of $632,000 but still below the 2007 peak of $772,000.

Despite this the RBA have warned that indebtedness and gearing remain around historically high levels and it could be unwise from a stability point of view for Australians to relapse from their conservative behaviour.

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