It won't need to be 17% this time around, that's for sure. Just to give people a sense of the magnitude of the debt Australians are in:
- When mortgage rates 'peaked' in 1989 at around 17%, aggregate interest payments ate up about 6% of aggregate household disposable income.
- When mortgage rates 'peaked' in 2007 at around 9%, aggregate interest payments ate up about 11% of aggregate household disposable income.
We're more indebted now than we were in 2007. An external shock that causes mortgage rates to rise by as little as 1% (relative to incomes) will probably be enough to trigger our long overdue 'Minksky moment'. [0]