The war chest of savings Australians have built during the pandemic is reducing the risks of high household debt load, economists say.
As the economy continues to recover from the pandemic and more workers regain employment, new analysis shows borrowers are boosting their offset accounts as well as returning to paying down their mortgages.
The high level of household debt in Australia has worried experts for years, approaching 200% of household income in recent years, before edging slightly lower, but not before prompting warnings it could pose a risk in any crisis.
But the stimulus deployed to get Australia through the pandemic, including low interest rates, wage subsidies and mortgage holidays, has helped to lower the risk of the debt load, economists say.
Households squirrelled away almost $119 billion into their savings accounts in 2020, according to figures released by the Australian Prudential Regulation Authority.
At 1 November, the big four banks held a record $813.3 billion in savings from households, up $78.8 billion over the previous 12 months, with almost all the growth occurring since the pandemic.
CBA senior economist Kristina Clifton says the Government’s stimulus payments have allowed households to accrue a large stock of savings.