Bankruptcies fall even further
Quite a lot of misguided people seem to desperately want an explosion of household insolvencies, but it's not happening.
And, for that matter, a few fibbers are wildly exaggerating the extent of household financial stress too.
Onto the latest AFSA stats, wherein part IV and part XI bankruptcies fell to the lowest level in 24 years, which is good to see.
There were big year-on-year falls across New South Wales (-9 per cent), Victoria (-10 per cent), and Queensland (-13 per cent).
There were big year-on-year falls across New South Wales (-9 per cent), Victoria (-10 per cent), and Queensland (-13 per cent).
The smoothed annual figures are plotted below (click to expand):
There should be more bankruptcies in the post, though, as the construction boom ends.
Personal insolvencies fell by a thumping -19.4 per cent in the March quarter - for the lowest quarterly result since 2005 - with big quarterly declines right across the board, and personal financial distress clearly much lower than a year earlier (-9.2 per cent).
That makes some sense as the 'misery index' tells us that we now have:
- low unemployment;
- low inflation; and
- low mortgage rates.
Source: AFSA
Plotting the figures on a rolling annual basis shows the marked recent improvement.
But even these figures are a bit misleading, because Australia is a high population growth country, adding the best part of 5 million to its population every dozen years or so.
Looking at insolvency rates per 1,000 of resident population, they're low across all states and territories, and have even begun to improve in all of the resources jurisdictions.
The economy in Western Australia is clearly firing up a bit with iron ore spiking to $100 per tonne on renewed supply disruptions in Brazil; but there have been so many false dawns that nobody wants to say it.
The wrap
Very low bankruptcies and insolvencies, then, in line with what you might expect given the strength of the jobs market in recent years.
Every month there's a headline about 'record' mortgage stress.
The truth is - and this should be obvious when you think about it - some borrowers got themselves into a fix by buying at the peak or taking out multiple interest-only loans during the frenzy, which were subsequently reset on them.
The truth is - and this should be obvious when you think about it - some borrowers got themselves into a fix by buying at the peak or taking out multiple interest-only loans during the frenzy, which were subsequently reset on them.
But on the flip side, most homeowner Aussies are enjoying mortgage rates close to record lows, and the statistics reflect this.
This also mirrors the Reserve Bank's detailed research showing relatively few reports of financial distress.
It should always be remembered, though, that even in a deep crisis most borrowers don't default, so there are no grounds for complacency.
It should always be remembered, though, that even in a deep crisis most borrowers don't default, so there are no grounds for complacency.
