Household Debt Over the Edge
Households raised a net $22.3 billion during the quarter to bring their total outstandings to $590.5 billion at the end of June 2002. Borrowing from banks was very strong at 20.1 billion ( of which $10.0 billion was for owner occupied housing), an increase of $7.1 billion.
Houshold Debt is now in excess of Household liquid assets at 104%. As consumption has been financed by continued borrowings againts home equity, this game of musical chairs must now come to an end as the houseing boom finishes. Banks are warning it has got to stop. The reserve Bank rang alarm bells on this some months ago. (See findem News article on 20 July 2002). Check out or houseprice graph in the Research Centre
Posted Saturday, 28 September 2002
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