Australian households have been redeeming more than adequately their home loans and currently they are $160 billion ahead on their mortgages, The Australian reported.
Nearly 50% of the three million Australians with a home loan have made use of the unprecedented decline in interest rates to plough more money into paying off their debt and, according to data from the Reserve Bank of Australia (RBA), customers are 14% in front on their mortgages, which have a combined volume of $1.14 trillion. In March 2008, when the first signs of distress in financial markets emerged, the mortgage buffer built up by Aussies was just 11%.
The RBA, which has slashed its cash rate to the lowest level in 53 years, has estimated that Australian families are 20 months in front on their mortgage loan repayments, which means that a household with a $300,000 home loan is now $40,000 ahead.
Meanwhile, non-performing home loans, or those unpaid for more than 90 days, account for just 0.6% of the total number of mortgages extended to Australians.
Shane Oliver, chief economist at the Australian Bankers’ Association, commented that until recently, the household indebtedness had been at “very high and dangerous levels.” He considers that household debt should be taken back to acceptable levels before this becomes a problem should the country’s economy deteriorate and jobless rates suddenly increase.