Posted on 28 Dec 2009
In what is a new record, Australians now owe more in household debt and in comparison to the annual earnings of the country’s economy.
Reserve Bank figures show mortgage, credit card and personal loan debts now stand at A$1.2 trillion, up 71 percent from just five years ago and equating to A$56,000 for every man, woman and child in the country, News Ltd says.
The spending binge of Australians, fuelled most recently by the government’s First Home Owner Grant, means personal debt now totals 100.4 per cent of the country’s annual GDP — one of the highest ratios in the developed world.
“It’s the first time household debt has cracked 100 per cent of annual GDP and it’s a terrible, terrible sign,’
“It shows we are living beyond our means and many highly geared borrowers are now extremely vulnerable to further rate rises. They are already saturated with debt and will not be able to tolerate much of an increase to their repayments,” he added.
Professor Keen highlighted that
“We are in the midst of the peak spending season when billions go on the plastic.Yet, the Reserve Bank data, dates back to October’s debt levels only. This means there is another two months of First Home Owner Grant-fuelled mortgage activity still to be taken into account,” he said.
The extra cost is expected to add billions to the burgeoning debt tally.
