Households 'likely to remain cautious'

Term deposits may continue to prove popular savings products as Aussie households are unlikely to remain cautious with their money in the coming months, according to the Reserve Bank of Australia (RBA).

Minutes from the most recent monetary policy meeting suggested that the volatile global financial markets may be partly responsible for the caution shown by consumers.

"Members discussed the financial position of the household sector in Australia. Over the past year, the household saving rate increased further and the debt-to-income ratio declined slightly," the minutes stated.

However, the importance of having money set aside, for example in term deposit accounts, was emphasised by the observation that despite the majority managing their debt levels well, the number of mortgage arrears had still "drifted up".

Despite this, the RBA noted that by international standards, the amount of people struggling to pay their home loans back was relatively low.

Consumer caution was recently demonstrated by the figures from the RBA showing that there was a record decline in the average amount owed on credit cards.

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