Another great
RBA Bulletin article tracking the change in household riskiness over the last few decades. The RBA shows that household debt to income ratios, house value to income ratios, consumer willingness to take on new debt, and paydown periods have been declining since the middle of the 2000s. The following para reiterates the point I have made countless times here (lost on Steve Keen) about what drove the once-off increase in household debt levels during the 1990s and early 2000s (RBA charts follow):
"An important factor explaining the rise in household debt was the structural fall in nominal interest rates following the transition to low inflation in the early 1990s, which raised the borrowing potential of households.1 Financial deregulation during the 1980s also enabled greater competition in the market, expanding the availability of mortgage finance…Since 2005, however, growth in household borrowing has slowed, particularly following the global downturn.”
