Decade-long household debt binge
Household borrowing in Australia over the past 10 years has risen at an annual rate of about 14 per cent with the increase almost all due to borrowing for housing, according to the Reserve Bank. While owner-occupiers still represent the largest group, the fastest growing segment is borrowing for investment purposes.
Borrowing for homes now makes up 83.5 per cent of all household debt with owner-occupier home loans accounting for 60 per cent. About 30 per cent of all households have mortgages, a percentage which has remained steady over the decade despite the fall in interest rates.
Household debt as a proportion of income has increased since 1992 from 56 per cent to 125 per cent. Ten years ago Australia's debt-to-income ratio was low by international standards but now we're amongst the top group of developed countries. The age group with the highest debt-to-income ratio is the 35-39 year-olds, with the ratio dropping significantly once people are over 50. Total household borrowing in Australia now stands at about $530 billion.