RBA says household debt overtakes business

Reserve Bank figures show that household debt has overtaken business borrowings for the first time in almost 50 years. Household debt now stands at 67.2 per cent of gross domestic product, while business debt is at 54.9 per cent.

The bank warned that home buyers in particular are vulnerable, especially those people who rushed in at the tail-end of the residential property boom.

The bank also stated that the insurance industry would bear the brunt of any housing industry shake-out, not the home finance lenders, as mortgage insurance has been heavily used by many borrowers. The risk of loss from these loans has moved from the deposit-taking institutions to the insurers, the bank said in its annual report.