Raid on savings brings mortgage pain closer

Lucas BairdReporter

Sep 28, 2023 – 5.11pm

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Key Points

Why it matters: Even amid higher interest rates and inflation, borrowers have held up well.
But household savings fell for the first time in 16 years in the June quarter.
It erodes a key protection for households against tougher conditions, and investors expect bad debts to rise in the next 12 months.

Big bank investors are warning that Australia has not yet passed the risk of the so-called mortgage cliff after household savings, which have sheltered borrowers from the worst of high inflation and rising interest rates, recorded the first fall in 16 years.

Household deposits dropped by $6 billion in the June quarter, according to the Australian Bureau of Statistics, while the household savings ratio dived for the seventh straight quarter to 3.2 per cent, the lowest level since 2008.