HOUSEHOLDS – ECONOMIC ASPECTS – AUSTRALIA

RBA keeping close eye on home owners

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Original article by Clancy Yeates
The Age – Page: 23 : 27-Sep-17

The Reserve Bank’s assistant governor for the financial system, Michele Bullock, says the central bank is closely monitoring the high levels of household debt. She has warned that mortgage borrowers who have capitalised on historically low interest rates would be especially vulnerable to any "economic shock". Bullock adds that consumer spending may be affected when interest rates begin to rise. She also notes that measures aimed at restricting growth in higher-risk mortgage lending have made the banking system less vulnerable to a financial shock.

CORPORATES
RESERVE BANK OF AUSTRALIA

Wealthy carrying big debt, says ABS

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Original article by Jacob Greber
The Australian Financial Review – Page: 9 : 14-Sep-17

The Australian Bureau of Statistics estimates that the proportion of households that are overindebted rose from 21 per cent in 2003-04 to 29 per cent in 2015-16. Chief economist Bruce Hockman says the mean household debt increased by 83 per cent in real terms over this period, while mean asset value and gross income rose by 49 per cent and by 38 per cent respectively. Hockman adds that 47 per cent of the nation’s wealthiest households that have an outstanding property loan are overindebted.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS

Wage growth is economy’s Achilles heel, warns Moody’s

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Original article by Jacob Greber
The Australian Financial Review – Page: 3 : 24-Aug-17

Ratings agency Moody’s Investors Service has maintained its stable outlook for Australia’s triple-A credit rating. However, Moody’s says factors such as low growth in wages and rising household debt – which now comprises 123.1 per cent of GDP – represent key risks to the economy. Meanwhile, Moody’s has forecast that state and federal government debt will increase to 42 per cent of GDP in 2017-18, while the firm has questioned whether the Federal Government will be able to limit growth in expenditure over the Budget forward estimates period.

CORPORATES
MOODY’S INVESTORS SERVICE INCORPORATED

Nation ‘more equal than the 70s’

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Original article by Rachel Baxendale, David Uren
The Australian – Page: 2 : 3-Aug-17

The Melbourne Institute’s Roger Wilkins has disputed claims by Federal Opposition Leader Bill Shorten than inequality in Australia is at its highest level in 75 years. Professor Wilkins is the author of the Household Income and Labour Dynamics in Australia (HILDA) study, which found that average living standards across all income groups have increased since the annual survey began in 2001. He suggests that equality in Australia is now higher than it was four decades ago.

CORPORATES
UNIVERSITY OF MELBOURNE. INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH, AUSTRALIAN LABOR PARTY, AUSTRALIA. DEPT OF THE TREASURY, GRATTAN INSTITUTE

Typical family earns less than 2009 income

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Original article by Peter Martin
The Age – Page: 10 : 2-Aug-17

Analysis of data from the Household Income and Labour Dynamics in Australia (HILDA) survey shows that median real household disposable income was $A76,225 in 2015, compared with $A77,411 prior to the onset of the global financial crisis. The data also shows that the typical household income in Melbourne has increased by $A9,785 since the annual HILDA survey began in 2001, while typical household income in Sydney has risen by just $A5,182 over the last 15 years.

CORPORATES
UNIVERSITY OF MELBOURNE. INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH, AUSTRALIA. DEPT OF SOCIAL SERVICES

Mortgage stress growing: ME Bank

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Original article by Michael Bleby
The Australian Financial Review – Page: 7 : 31-Jul-17

Almost 50 per cent of Australian mortgage holders are spending more than 30 per cent of their pre-tax income on repayments, according to a survey by ME Bank. It also found that borrowers are less confident than they were six months ago about their ability to meet minimum mortgage repayments, with investors more pessimistic than owner-occupiers. Similarly, borrowers are less confident than when previously surveyed about their ability to repay more than the minimum amount on their mortgage.

CORPORATES
ME BANK, RESERVE BANK OF AUSTRALIA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

Record debt levels to keep RBA on hold

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Original article by Myriam Robin
The Australian Financial Review – Page: 25 : 12-Jul-17

PIMCO Australia Robert Mead notes that a rise in the nation’s household debt-to-income ratio to a record high has coincided with a downturn in household debt in other developed countries. He warns that it will be hard for the Reserve Bank to increase the cash rate in the near-term, given the growth in household debt and residential property prices. With little prospect of a local rate rise for some time, US interest rates could potentially soon return to parity with Australian rates for the first time in 15 years.

CORPORATES
PIMCO AUSTRALIA PTY LTD, PACIFIC INVESTMENT MANAGEMENT COMPANY LLC, RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD

Household debt hits all-time high

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 4 : 4-Jul-17

Australia’s household debt-to-income ratio rose to a new high of 190.4 per cent in the March 2017 quarter. Treasurer Scott Morrison has indicated that rising household debt was a key factor for the Federal Government in backing new regulatory measures aimed at curbing interest-only loans for property investors. He has warned of the economic impact if the nation’s residential property market experienced a "hard landing". He adds that the Opposition’s proposed negative gearing reforms would have heightened the risk of a hard landing.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, RESERVE BANK OF AUSTRALIA, AUSTRALIAN LABOR PARTY, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, CORELOGIC AUSTRALIA PTY LTD

BIS sounds warning on our debt levels

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Original article by Myriam Robin
The Australian Financial Review – Page: 20 : 26-Jun-17

Data from the Reserve Bank shows that Australia’s household debt-to-income ratio is currently at a record 189 per cent. Meanwhile, the Bank for International Settlements notes that the Australian economy is one of several that have high levels of household debt which would be vulnerable in the event of a sharp rise in interest rates. The BIS report also notes that the cost of servicing this debt is already having an impact on economic growth.

CORPORATES
RESERVE BANK OF AUSTRALIA, BANK FOR INTERNATIONAL SETTLEMENTS

RBA worries property could spark downturn

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Original article by Jacob Greber
The Australian Financial Review – Page: 2 : 21-Jun-17

The minutes of the Reserve Bank’s June 2017 monetary policy meeting show that board members are concerned about the potential impact of rising household debt and residential property prices on economic growth. Concerns were also raised that financial stability could be undermined by record low interest rates. Board members also stressed the need for continued co-operation between the central bank and other regulatory agencies, such as the Australian Prudential Regulation Authority.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, COUNCIL OF FINANCIAL REGULATORS, UNITED STATES. FEDERAL RESERVE BOARD