Borrowers take bigger loans

Borrowers take bigger loans

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Borrowers have almost doubled the size of their loans over the past five years, the latest Reserve Bank of Australia (RBA) figures have revealed.

According to the RBA, total housing debt hit $910.1 billion in December, up 92 per cent since December 2004.

Housing debt currently accounts for 135 per cent of disposable household income, compared to 75 per cent 10 years ago.

AMP Capital Investors chief economist Shane Oliver told News Limited that the pace of borrowing could exceed household income growth.

"Last year we started building 135,000 houses but the underlying demand was [for] 180,000 to 190,000," he said.

"This year we should start building about 155,000 houses but the underlying demand is close to 200,000.

"The RBA has to be careful raising interest rates because, if they go too far, they can end up tipping the economy over the edge.”

Borrowers have almost doubled the size of their loans over the past five years, the latest Reserve Bank of Australia (RBA) figures have revealed.

According to the RBA, total housing debt hit $910.1 billion in December, up 92 per cent since December 2004.

Housing debt currently accounts for 135 per cent of disposable household income, compared to 75 per cent 10 years ago.

AMP Capital Investors chief economist Shane Oliver told News Limited that the pace of borrowing could exceed household income growth.

"Last year we started building 135,000 houses but the underlying demand was [for] 180,000 to 190,000," he said.

"This year we should start building about 155,000 houses but the underlying demand is close to 200,000.

"The RBA has to be careful raising interest rates because, if they go too far, they can end up tipping the economy over the edge.”

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