Aussie borrowers saving, which is not great news for housing market

The Reserve Bank’s bi-annual Financial Stability Review is always a good read for anyone interested in domestic and overseas economic conditions.  The review is focused on assessing Australia’s financial system and any potential risks to financial stability.  Working to ensure a strong financial system and efficient payments system is one of the key objectives of the Reserve Bank, so its commentary and analysis in this publication provides an important insight about how the RBA is reading domestic and global economic conditions.

For the time poor (or less interested!) a must-read is the ‘Household Balance Sheets’ section, which starts on page 37.  One of the central themes running through the report is that Australian households are very much focused on saving; borrowing has slowed and is now more in line with income growth and households are choosing to repay their debt more quickly than required.  The bank is very much supportive of the higher household savings ratio (households, on average, are currently saving about 9.5% of their disposable income), and in fact is actively encouraging Australians to save, save, save!