Our estimate is that currently, less than 5 per cent of indebted owner-occupier households have negative equity, and the vast bulk of these households continue to meet their mortgage obligations. One factor that has helped here is that the share of new loans with high loanto-valuation ratios (LVRs) has declined substantially (Graph 15).
It is encouraging to see that the Government is taking a number of initiatives to reduce the size of civil service and thus reduce Government’s operating expenditure. As a result of continuous fiscal deficits, Government debt has risen over the last two decades. Currently, it stands at around 52 percent of GDP.