Aussies less fazed about higher debt

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Australian consumers are becoming more comfortable with higher loan to value ratios and increased levels of debt, according to a survey of homebuyer confidence.

RFi research director Alan Shields, who prepared the index, said that average LVRs could begin to increase as homebuyers become more comfortable taking on more debt.

"What we're finding is that there is almost no correlation between indebtedness and stress. Australians appear slightly more indebted than they had been, yet stress is not going up. And if they're comfortable with their debt and they're not stressed, the likelihood is they're going to borrow more," he said.

The survey found that the number of respondents who were comfortable borrowing at LVRs above 80% has increased since last September. In spite of the higher LVRs, Shields said Australian homeowners seem to be having an easier time meeting their repayments.

"The proportion of people comfortable buying at higher LVRs is up, but the proportion of people both anticipating and experiencing mortgage stress has improved," he said.

A recent Dun & Bradstreet survey, however, suggested that more Australians are relying on credit due to low cash flow, indicating that 41% of households with children would have to turn to credit cards to meet living costs.

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