In recent years, businesses often have indicated a capability to dip into this backlog for capital investments that can quickly displace labor costs should they be perceived as about to rise. This view is reinforced by securities analysts who presumably are knowledgeable about the companies they follow.
But what I’ve just shown doesn’t account for offset accounts. These have grown rapidly over recent years and are now an important feature of the Australian mortgage market (Graph 5). Funds held in these accounts are ‘offset’ against the loan balance, reducing the interest payable on the loan. In that way they are similar to a principal repayment.