June 26, 2009

Kiwi households gorged on debt

Reserve Bank of New Zealand - Key Graphs - household debt

By December 2008 the outstanding total debt of households had increased more than six times in dollar terms since 1990. As a percentage of households' disposable income, household debt peaked at over 160% early in 2008, nearing 3 times the December 1990 level. The weighted average interest rate on total household debt however had fallen from over 15% to just above 8.5% per annum (at December 2008, 92% of household debt was housing debt, at an average rate of around 8%). Interest servicing of the increased debt, as a percentage of incomes, was 50% higher than in 1990.

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