Australia's mountain of mortgage debt is an even greater deadweight on cons...
SYDNEY - Australia’s mountain of mortgage debt is an even greater deadweight on consumer spending than previously thought, a central bank paper argued on Thursday, suggesting recent rate cuts might not be enough on their own to revive activity.
Most of that is home loans, and the paper found it was this type of debt that has the largest impact on spending, even when taking into account rising incomes and house prices. It could be one reason household spending has been unusually weak in Australia since the global financial crisis, weakness that dragged economic growth to a decade-low early this year.
RBA Governor Philip Lowe has also taken the unusual step of openly calling for more action on fiscal stimulus and infrastructure spending to support growth, noting that the effect of lower rates has waned over time.
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