Besides Australian banks not passing in full the interest rate cut the Reserve Bank of Australia (RBA) made in August, interest rates would not always be so low. Given those circumstances, Australian Prime Minister Malcolm Turnbull urges Australians to be prudent with their finances.
Turnbull, who marks his first year as prime minister, admits it is not his role as head of government to lecture Australians on household finance management. He points out low interest rate is just one of the levers of the RBA to maintain financial stability to address excessive borrowing.
The PM says people should not focus on the size of the federal debt but on personal debt. Australians owe banks $1.45 trillion, with the debt as a percentage of household income growing to 187 percent for the March quarter, a result of the lower cost of borrowing, reports The West Australian.
Besides Australians being the world’s most indebted people, data released on Tuesday by the Australian Securities and Investment Commission (ASIC) showed a 26 percent increase in interest-only mortgages sold by banks in the past three months that now hold a record $557 billion in mortgage in which only the interest is being paid. In 2015, ASIC cracked down on banks issuing risky mortgages.
Turnbull notes that in the last 12 months he led the federal government, economic growth has reached 3.3 percent from 2 percent and 225,000 new jobs had been added in the year.
Meanwhile, Daily Telegraph reports that when the PM meets with US President Barack Obama this weekend, he would use Australia’s tough border control as a model for a critical summit on counter-terrorism in New York. The summit will seek to craft an agreement on greater intelligence sharing, border data and terrorism watch list.
“The message we will be taking (to the US) is if you want a generous humanitarian program, you have to control your borders. It is the absolute prerequisite,” says Turnbull who will be accompanied by Immigration Minister Peter Dutton. He says the public will not accept high levels of immigration and high levels humanitarian migration unless they are assured the government decides who comes to Australia and the manner they came in.
VIDEO: Australian Household GDP Debt Crisis
Source: Mortgagee Property