RBA deputy governor Dr Philip Lowe says record low interest rates are working to support spending. Photo / Getty Images
RBA deputy governor Dr Philip Lowe says record low interest rates are working to support spending. Photo / Getty Images
The Reserve Bank of Australia is warning borrowers against taking on too much debt as concerns grow about a potential housing bubble in Sydney and Melbourne.
RBA deputy governor Dr Philip Lowe says record low interest rates are working to support spending and help the Australia economy transition away fromits reliance on mining investment.
But, he conceded, the central bank was treading a "fine line" as it tried to boost the economy without creating other problems like excessive borrowing.
"It is ... unlikely to be in Australia's long-term interests to engineer a consumption boom by encouraging people to borrow large amounts against future income," said Lowe.
"This is especially so when debt levels are already high and prospects for future income growth are not as positive as they once were."
His comments come after the RBA cut the cash rate to 2 per cent in early May, and amid fresh concerns about a house price bubble in Sydney and Melbourne.
Housing prices in the nation's capital cities have risen 7.9 per cent in the year to April, with the Sydney market up by 14.5 per cent.
