Australian economy 'strong' despite high household debt

CANBERRA, Oct 01 (Xinhua): Australia's Treasurer Josh Frydenberg has played down concerns about the nation's rising household debts, saying the heaviest burdens are on those that can carry them.

Date from the Reserve Bank of Australia (RBA) revealed that the value of mortgages grew 5 percent to 1.19 trillion Australian dollars (859 billion US dollars) in the 12 months to August while the value of investment loans grew to 595 billion Australian dollars (429 billion U.S. dollars).

Frydenberg, who was sworn-in as Treasurer in August, said on Monday that he was "closely monitoring household debt" but pointed out that only 15 percent of debt was owed by the bottom 40 percent of households in terms of income.

"Even though Australia's household debt is relatively high, the ability of households to service this debt is currently around the long-run average," he told News Corp Australia.

"The effect of lower interest rates has more than offset the effect of higher levels of debt."

"Of course there is no room for complacency."

"Remember household assets in aggregate are more than five times the value of household debt."

"And in terms of the distribution of the debt, 40 percent of it is held by the top 20 per cent of households ranked by income."

Frydenberg inherited an economy in good shape after it surpassed projections to grow by 3.4 per cent in the 12 months to the end of June 2018.