Australian households are building a financial cushion by repaying mortgages faster and saving more, while businesses are indicating renewed willingness to borrow, the nationâ€™s central bank said.
â€œGiven the large share of households with mortgage prepayment buffers, along with relatively low unemployment and moderate income growth, most households appear well placed to meet their debt obligations,â€ the Reserve Bank of Australia said in its semiannual financial stability review released in Sydney today.
A slowdown in mining that helped secure 21 recession-free years in Australia has heightened focus on risks to an economy where consumers took on more debt than Americans at the height of the mortgage bubble. Policy makers have signaled confidence they have the tools to cope with any external turbulence: Australia has the highest benchmark interest rate among major developed nations and the government has pledged to return the budget to surplus.
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