We're buying debt quickly and it's a little dangerous: ABS

Are too many Australians rolling the dice with mortgage debt? Recent data from the ABS indicates this is the case.

Let us know your thoughts about the possible future effects of rising household debt.


Too many people view a return to modest interest rates as unlikely and to high interest rates as only a theoretical possibility. As well they don’t do any modelling (what-if calculations) and so have no idea how rapidly mortgage repayments rise with interest rates. Consequently they are mortgaged up to levels that will give them no buffer but instant pain with only small rate rises.

Look at the wailing over power prices. Yes power is too expensive but if you look at the historical trends of power prices as a fraction of household expenditure you have to conclude that relatively small changes in costs are producing great pressure. If you are broke you can turn off the aircon and sweat it out but you can’t turn off the mortgage repayments without more serious trouble. A rise in interest rates of only a few percent will make those power bills look trivial and detonate many household budgets altogether.

Politicians have an interest in singing “don’t worry be happy” loudly over anybody who suggests that the future is not so rosy. We shouldn’t blame them for all unbounded optimism though as the facts are there for everybody to see and understand - if only they have the will. If more had done so and limited their auction bids accordingly over the last decade big city property prices wouldn’t be so high and the house of cards wouldn’t be so shaky.