Homeowners reluctant to spend big

Australian homeowners cut back on spending when their mortgage debts are higher, with new research challenging previously-held economic wisdom.
Australian homeowners cut back on spending when their mortgage debts are higher, with new research challenging previously-held economic wisdom.

AUSTRALIAN homeowners cut back on spending when their mortgage debts are higher, with new research challenging previously-held economic wisdom.

A Reserve Bank of Australia research paper released yesterday used household spending data to show higher debts mean spending drops.

“We find evidence consistent with a ‘debt overhang effect’ – households cut back on their spending when they have higher levels of outstanding mortgage debt,” the report said.

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