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Aussies are $160bn ahead on mortgages
1. Aussies Are $160bn Ahead On Mortgages
By Michael Lombardi for real estate investing | April 10, 2013
About half of the nation’s three million home-loan customers have taken
advantage of low interest rates to pay down debt at a pace the likes of which
has never been seen.
New Reserve Bank of Australia figures show borrowers are a record 14 per
cent in front on their combined $1.14 trillion of housing loans.
In March 2008, as the global financial crisis was beginning to take effect, the
mortgage buffer was 11 per cent.
“People are paying down their homes, they’re not drawing down on equity to
pay for things which was going on during the GFC,” said Australian Bankers’
Association chief executive Steven Munchenberg.
“House prices were going up and people were using the equity to invest or
spend, but it would suggest they are not doing that now, they are very
happily paying down their mortgages as quickly as possible.”
The RBA – which has cut its cash rate at the lowest level since 1960 –
estimates borrowers are 20 months ahead on repayments.
That suggests a household with a loan of $300,000 loan would be $40,000 in
front.
A family with a $500,000 loan would be $67,000 to the good.
AMP chief economist Shane Oliver said that prior to the big pay down,
Australia’s household debt had been at “very high and dangerous levels”.
Dr Oliver said it was important household debt was bought back to
sustainable levels because high debt levels becomes a major problem if the
economy takes a downward turn and unemployment rises sharply.
“It’s almost as if there was an obsession with taking on debt prior to the
global financial crisis, now we’ve got a bit of an obsession with paying down
debt,” he said.
“We’ve gone from an environment of consumption and borrowing and
spending to an environment where saving and paying down debt is the new
fashion.”
