Money: Fitch warns of resurgence in household debt as optimism rises - - PressFrom - Australia
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MoneyFitch warns of resurgence in household debt as optimism rises

00:36  05 june  2019
00:36  05 june  2019 Source:   smh.com.au

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Fitch Ratings has warned that any sharp rebound in house prices and housing debt fuelled by the newfound optimism towards property would be a "negative" for the country's banks. With interest rates expected to fall to new record lows later on Tuesday, Fitch 's senior director of Asia-Pacific financial.

Fitch Ratings has warned that any sharp rebound in house prices and housing debt fuelled by the newfound optimism in housing would be a "negative" for the country's banks. With interest rates expected to fall to new record lows later on Tuesday, Fitch 's senior director of

Fitch warns of resurgence in household debt as optimism rises© Provided by Nine Digital Pty Ltd A re-acceleration in household debt would be negative for banks, said Fitch.

Fitch Ratings has warned that any sharp rebound in house prices and housing debt fuelled by the newfound optimism towards property would be a "negative" for the country's banks.

With interest rates expected to fall to new record lows later on Tuesday, Fitch's senior director of Asia-Pacific financial institutions, Tim Roche, said a key concern was how cheaper credit and greater optimsim about housing might reignite activity in the property market, and household borrowing.

Fitch warns of resurgence in household debt as optimism rises© Dallas Kilponen A re-acceleration in household debt would be negative for banks, said Fitch.

Mr Roche said decline in property prices had been a "healthy" correction so far, noting that it had not occurred alongside a significant rise in the unemployment rate.

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Fitch Ratings has warned that any sharp rebound in house prices and housing debt fuelled by the newfound optimism in housing would be a "negative" for the country's banks. With interest rates expected to fall to new record lows later on Tuesday, Fitch 's senior director of

With optimism towards property growing, Fitch Ratings' senior director of Asia-Pacific financial institutions, Tim Roche, signalled the ratings agency was closely watching for any signs of a resurgence in Australian households ' debt levels.

But he signalled the ratings agency was closely watching for any signs of a resurgence in Australian households' debt levels.

Mr Roche said the election outcome, the Australian Prudential Regulation Authority's proposal to lower the interest rate "floor" used by banks, and the prospect of an interest rate cut, had all added to optimism in the housing market.

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Fitch Ratings has warned that any sharp rebound in house prices and housing debt fuelled by the newfound optimism in housing would be a "negative" for the country's banks. With interest rates expected to fall to new record lows later on Tuesday, Fitch 's senior director of

Fitch Ratings has warned that any sharp rebound in house prices and housing debt fuelled by the newfound optimism in housing would be a "negative" for the country's banks. With interest rates expected to fall to new record lows later on Tuesday, Fitch 's senior director of Asia-Pacific financial

“That may put a bit of a floor under where the property market’s coming, but again coming back to the household debt point, the risk is this re-accelerates the growth in household debt,” Mr Roche said at Fitch's conference in Sydney.

“So, from a bank point of view, we’d see that as a negative as well. We certainly wouldn’t want to see house prices start to take off again, and we wouldn’t want to see the household debt numbers start to take off again.”

Household indebtedness has long been identified as a key risk to Australia's economy, with the ratio of household debt to disposable income sitting at 189.6 per cent most recently. That compares with 100 per cent in 1998, and about 60 per cent in the late 1980s.

Mr Roche said the "missing link" in dealing with the high level of indebtedness in Australia was wages growth, but he emphasised this was this not something that could be solved by the Reserve Bank or APRA.

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