Older borrowers drive escalation in household debt
The shifting demographic profile of home loan borrowers in Australia may mean that the economy adjusts differently to any shocks, Reserve Bank governor Ian Macfarlane said. Macfarlane said the biggest single contribution to the increase in household debt was among people aged in the 40s and 50s. “In earlier generations, they would run down their debt to zero. Now they are not. They are going back and having a second and third helping to get a better house or additional properties.”
Macfarlane also said the banking system was less risky than in the past because banks used securitised mortgages and credit derivatives to transfer their risks.