Update- Australian Household Debt
There is a lot of noise about a residential property bubble, undersupply versus oversupply of residential property and rising interest rates but all these pail in comparison to the growth of household debt.
Unlike other developed nations the size of Australian household debt has only gone up and up since the 2008 Global Financial Crisis and with the RBA cash rate at 2.0% mortgage holders are feeling comfortable.
But what happens when the RBA cash rate increases to 3.0% and then 5.0% or even back to 7.5%?
If you have a look at the attached chart, such increases would accelerate us past the historical interest burden levels of the past 25 and 40 years.
A rising interest rate will create financial chaos for property, shares and bonds but it will also present investors who have not borrowed excessively with the opportunity to buy more quality assets at discounted price.
To quote Warren Buffett... be greedy when others are fearful and be fearful when others are greedy.
At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me via Contact Us or to call me on +61 2 9267 2322.
30th-July-2015 | 
