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The Cash Rate and the Consumer: A Modern Australian Socio-Politico-Economic Saga

Andrew C. Worthington,Abbas Valadkhani-2013-01-01-Griffith Research Online (Griffith University, Queensland, Australia)
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© 2013 American Council on Consumer Interests 1 The Cash Rate and the Consumer: A Modern Australian Socio-Politico-Economic Saga Andrew C. Worthington, Griffith University Abbas Valadkhani, University of New England Purpose As in many developed economies, the residential mortgage market is one of Australia’s most important retail financial markets, not least from the perspective of consumers and lenders, but also from that of Australia’s central bank, the Reserve Bank of Australia (RBA). From the household point of view, as at March 2012, some 67 percent of Australian households possessed residential property (either owned outright or mortgaged), with 36 percent of households bearing a home loan, with a median value of $200 thousand dollars for debt-holding households and gearing (the ratio of home loan debt to assets) of 44 percent (RBA 2012). Consequently, Australian households are now among the most indebted in the world, with globally and historically high levels of debt gearing an

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© 2013 American Council on Consumer Interests 1 The Cash Rate and the Consumer: A Modern Australian Socio-Politico-Economic Saga Andrew C. Worthington, Griffith University Abbas Valadkhani, University of New England Purpose As in many developed economies, the residential mortgage market is one of Australia’s most important retail financial markets, not least from the perspective of consumers and lenders, but also from that of Australia’s central bank, the Reserve Bank of Australia (RBA). From the household point of view, as at March 2012, some 67 percent of Australian households possessed residential property (either owned outright or mortgaged), with 36 percent of households bearing a home loan, with a median value of $200 thousand dollars for debt-holding households and gearing (the ratio of home loan debt to assets) of 44 percent (RBA 2012). Consequently, Australian households are now among the most indebted in the world, with globally and historically high levels of debt gearing an

Keywords

DebtCashLoanInterest rateDebt service coverage ratioPaymentBusinessConsumer debt

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