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Comment by random_moonwalk | Hacker News Reader

'In Australia, homeowners’ average debt as a share of income has swollen to 150%' - does this mean the monthly repayments are 1.5x the monthly income of owners? The number of > 100% debt as share of income is wild if I'm interpreting this correctly - how is this not indicative of a swathe of imminent defaults?

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No, it's a ratio of remaining debt to yearly income. Notice they say new home owners have a multiple of 4 to 5.

On average a person making 100k a year has 150k or remaining debt.

Ah this makes way more sense!

More specific, it's the outstanding debt to disposable (i.e., after tax) yearly income.

Even more specific, I it's probably the total outstanding mortgage debt in a country divided by the total disposable household income in the country, including incomes of non-mortage holders and renters. If you think that denominator doesn't make much sense, I largely agree, but it's fairly standard to calculate it that way in macro-economic reports. So I believe the article writer actually misinterpreted that number, writing that it's 150% of homeowners income.

There's an implicit "per year" in there. It's better expressed as a time: "100%" means "1 year's worth". There's no tipping-point.

It's a yearly number...they would have to spend all their income, including taxes, for 1.5 years to pay off their debt.

That is not what it means.

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