God bless Australia’s newly (not that new!) mortgage averse consumers. In their wisdom they are resisting the RBA’s siren song of cheap money and the blandishments of our idiot politicians to borrow and spend.
Since the GFC, here is what Australian households have decided to do with their cash:
Yes, that’s right, save it. In so doing they have bailed out our imprudent banks, helped reduce the current account deficit and have even slightly improved the nation’s debt ratios.
Compared with past rate cutting cycles, mortgage finance remains very subdued:
And that doesn’t really quite capture it. Check out the average mortgage size of this cycle versus past rate cutting cycles:
Stick that in your eye, RBA and Treasury! One of world’s most over-priced housing markets is going nowhere in a hurry, a great outcome.
Most importantly, consumers are doing what our elite have completely and abjectly failed to do. They have recognised that Australia has too much private debt. They have identified the falsehood that house prices are a one way ticket to endless wealth. They understand that’ll we have to work for a living. In so doing they are forcing global markets to reprice our currency.
While the elite have dithered, obfuscated and stumbled over the simple truth that the Australian dollar could have been brought down any time we liked via rate cuts and macroprudential policy, Australian households have acted to implicitly rebuild Australia’s tradeable goods sector by eschewing our elite’s plan for more mortgage debt.
If it persists, the prudent Australian consumer will rescue the economy despite the bumbling of our mortgage addled leadership.
I say three cheers to the unrepresented national hero that is the mortgage averse Australian!
