Australian Reserve Bank (RBA) warned that record low interest rates and easy financing channels in Australia's housing market have contributed to high household debt.
At its most recent meeting, two weeks ago, the central bank board heard a summary of the household debt bubble and, after detailed discussion, argued that exposure to debt made households "more vulnerable to economic shocks."
According to the minutes of the RBA board meeting held on July 3, members were told that global household debt levels had outpaced household incomes over the past 30 years, a trend particularly evident in Australia.
"the two main drivers of this trend are the decline in nominal interest rates," the minutes said.
"low inflation and financial deregulation, both of which increase household access to finance," he said.
In recent years, "mom and dad" investors have been pouring money into the real estate market, and the Bank of Australia says many ordinary borrowers are heavily affected by fluctuations in the property market and the economy.
"A notable feature of the Australian real estate market is that most homes are owned by families." "households with high levels of debt are more vulnerable to economic shocks and may therefore reduce consumption in the face of future income uncertainty," the minutes said.
"as a result, members agree that household balance sheets still require close and careful monitoring."
Prices in Sydney and Melbourne have fallen in recent years, most of them more expensive, the central bank said.
With the exception of Hobart, prices have been "fairly stable", with prices rising all the way because of limited supply.
The threat of Trade Wa
The central bank points out that the risks of global growth have increased and that new trade barriers may not only be the united states and china.
It warned that "an increase in trade tensions could undermine confidence, delay investment decisions and inhibit international trade, thereby undermining global economic growth."
The minutes did not specifically mention U.S. President Donald Trump, whose unpredictable comments raised speculation about a devastating global trade war.
Meanwhile, the Australian central bank has kept cash rates unchanged at 1.5 percent for the 23rd consecutive month, with many economists predicting they will not raise rates until 2020.