They have accounted for an unusually high proportion of housing purchases over the past couple of years – around 40 per cent. This has reflected the incentives created by various first-home owner concessions. Most of these purchases have been funded by floating rate mortgages, and the average loan to valuation ratio is relatively high, at around 90 per cent.
Clearly, this group will be very sensitive to changes in interest rates. In summary, if we look at the way the increase in household debt has been distributed, what households have done with the money, and the arrears rates on loans, it is reasonable to conclude that the household sector has the capacity to support the current level of debt.