The economic position of millions of people in Australia has become increasingly insecure, with debt levels reaching record proportions. The Reserve Bank of Australia (RBA) reported last month that household debt rose 12.7 percent in the year to June, to $795 billion. Over the past ten years, the ratio of household debt to income has jumped from 60 percent to 171 percent.

Most of this change was propelled by increased housing costs. Some $785 billion is owed on housing, up tenfold from $75 billion in 1990, according to the RBA.

The impact of mortage debt on households is the product of two factors: the amount borrowed and the prevailing interest rates. Currently Reserve Bank interest rates stand at 5.75 percent, much lower than 1989, when they reached 17 percent under the Labor government of Paul Keating. But the pressure of mortgages has increased because property prices have soared.

Posted: 10|12|06 at 8:00 am. Filed under: Auction News.