Keep saving and paying off debt says RBA

Aussies should keep saving and resist bingeing on debt says the Reserve Bank of Australia which is warning that households should be wary of the cut-price loan deals peppering the market.

The RBA said Australia's household debt-to-income ratio has fallen from 153 per cent in late 2006 to 148 per cent now but is still too high. The US rate peaked at 133 per cent during the sub-prime boom before the crisis.

“Household indebtedness and gearing remain around historically high levels,” the RBA report said. “It would therefore be undesirable from a financial stability perspective if households were to exhibit less prudent behaviour than they have over the past few years.”

Source: Herald Sun