The looming downside of household leverage – Mike Fitzsimmons & Paul Kerin

Today’s Australian contains a piece by Mike Fitzsimmons and Paul Kerin. The authors note the substantial increase is household leverage over the last quarter of a century, particularly the riseĀ  (more than tripling) of household debt relative to cash disposable income. While this may in part be a good thing (reflecting better credit access in more efficient lending markets), houehold leverage has also been fostered by historically low real interest rates. The authors examine the implications for households and the Australian economy when real interest rates inevitably rise. The full article is available here.

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