Cautious mood to prevail, Reserve Bank warns
THE bleak mood engulfing households was unlikely to lift any time soon, the Reserve Bank said, as consumers sought to rein in historically high debt levels.
THE bleak mood engulfing households was unlikely to lift any time soon, the Reserve Bank said, as consumers sought to rein in historically high debt levels.In its latest review of the nation's financial health, the central bank warned that the "prevailing mood of caution" in households would remain for now, amid signs of fragile confidence among consumers.While this was likely to result in subdued credit growth for banks, the Reserve said lenders were in good health and were better prepared to cope with any crisis on credit markets.The Financial Stability Review, published yesterday, said the increasingly severe tremors on global markets were affecting the balance sheets of banks, businesses and households. Although the ratio of household debt to income had fallen slightly, the Reserve said its current level of 154 per cent was "quite high" and many households were making extra repayments to get on top of their mortgages.Australian shares are down more than 10 per cent since the start of July. This has wiped more than 5 per cent from the value of a typical superannuation fund."Given that household net worth declined in the wake of renewed volatility in global financial markets, the prevailing mood of caution appears unlikely to lift in the near term," the report said.