Aussie households managing debt well
Australian household finances are in good shape despite increased housing related borrowings, according to the Australian Bankers' Association (ABA).
Thanks to low interest rates the value of housing related borrowings has increased by 7.3 per cent to $1.5 trillion, and the average household is more than two years ahead on their mortgage repayments, the ABA said in its household borrowing report.
"The trends that we are seeing across a range of household financial measures show that households are equipped to cope with increased borrowings," ABA executive director for industry policy, Tony Pearson, said.
"They are building resilience into their finances by increasing mortgage buffers and reducing the amount of interest paid on their credit card balance."
The report found although there was an increase of 3.5 per cent on credit card limits and a rise of 2.9 per cent in the total balance outstanding on credit cards over the year to March 2015, the balance accruing interest fell by 2.0 per cent. This represents the third year of decline.
"Households continue to save and are managing their finances well. While households are now increasing their borrowing faster than income, this increase in borrowings is being more than matched by an increase in the value of household assets," Pearson said.
"Every dollar of household debt is match by almost $6 of assets."
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
