Prime Minister Malcolm Turnbull has called on Australians to be prudent towards excess household debt, saying interest rates will not always remain low.
“It’s not for me to give lectures on household finance but I think most Australians are very alert to the fact that while interest rates are low they haven’t always been low and that you’ve got to be prudent in terms of your borrowing,” he told the West Australian Newspaper.
“It’s up to the Reserve Bank to maintain financial stability, and they have a number of levers, interest rates being the most obvious one, to address excessive borrowing if that’s the right term.”
In the March quarter, household debt as a percentage of household income continued to climb to 187 per cent on the back of emergency low interest rates. Australians carry the highest level of household debt of anyone in the world.
This burdening and record high household debt level has caused Moody’s Investors Service issue a recent warning that Australian banks will be in uncharted territory when the nation’s households have to contend with an economic downturn.
“The resilience of household balance sheets and, consequently, bank portfolios, to a serious economic downturn has not been tested at these levels of private sector indebtedness,” Ilya Serov, senior vice-president at Moody’s Financial Institutions said.
» Prime Minister’s debt warning for Australia – The West Australian, 15th September 2016.
» PM Turnbull urges homebuyers to be prudent with money, reminds Australians interest rates will not always be so low – International Business Times, 15th September 2016.
» Home debt threat: Moody’s bank warning – The Herald Sun, 19th August 2016.