Australia Household Debt at Record High

The Reserve Bank board will be facing record-high debt levels when it decides on Tuesday whether or not to follow other central banks by lifting the official cash rate, AAP reported. Ten years after the global financial crisis–which many trace to the collapse of two Bear Sterns hedge funds in July 2007–Australians are more indebted than ever, largely because of mortgages. The latest official data, published by the Reserve Bank on Friday, showed that Australian households owed debt in the March quarter equal to 190% of their yearly disposable income–a new all-time high. In a speech in May, Reserve Bank governor Philip Lowe blamed this trend on a combination of low interest rates, slow wages growth and house price rises fuelled by overseas investor demand and strong population increases. At its last interest rate meeting in June, the RBA board cited persistently weak wages growth as a key factor in it keeping the cash rate on hold at a record-low 1.5%–where it was widely forecast to stay on Tuesday.