At the end of March 2026, Australian households owed 177.7% of a year’s disposable income, on Reserve Bank figures. Housing debt made up 134.6% of that, about three-quarters of the total. Both ratios are lower than in the June quarter of 2022, when the Reserve Bank began raising the cash rate: household debt by 7.3 percentage points and housing debt by 4.0 points. The fall has not come from households paying down loans, since lending for housing kept growing throughout, but from incomes growing faster. Over the past year the housing debt ratio has turned up again.
The σ figure is APN’s certified reading for household finance conditions: how far they sit from their long-run average, measured in standard deviations. One of its inputs, the share of new lending written at high debt-to-income ratios, has been published by APRA only since 2019, so the reading rests on a shorter history than a full long-run baseline. The Reserve Bank ratios in this article are published data shown alongside the reading, not inputs to it.
What the ratio measures
The Reserve Bank publishes the ratio of household debt to household disposable income each quarter, compiled from the ABS financial accounts. Debt is the amount households owe at the end of the quarter. Disposable income is household income after tax, annualised so that the ratio compares debt with a full year of income, and measured before interest payments are deducted. The household sector in these national accounts also covers unincorporated enterprises, such as small businesses and farms owned by households. A ratio of 177.7% means households as a whole owe about 1.8 years of disposable income. Housing debt covers loans for owner-occupied and investment homes; the remainder, shown here as debt other than housing, covers personal loans, credit cards and other debt not secured against housing.
The ratio moves when debt and income grow at different rates. It falls when income grows faster than debt, even while the amount owed is still rising, and it rises when debt outpaces income.
Thirty-eight years of rising debt
Household debt stood at 63.4% of disposable income in the June quarter of 1988, and housing debt at 31.9% in the September quarter, the first quarter the housing series covers. The household ratio passed 100% in the June quarter of 1998 and rose fastest in the decade that followed, reaching 163.2% by the June quarter of 2006. It then held between about 159% and 168% for eight years, before rising again to its highest level, 187.7%, in the June quarter of 2018. Housing debt kept rising for longer, reaching its own highest level, 138.5%, in the June quarter of 2022.
Household debt, housing debt and other debt, % of annualised household disposable income, 1988–2026
Source: Reserve Bank of Australia, Statistical Table E2 Household Finances – Selected Ratios, household debt to income and housing debt to income, quarterly, June quarter 1988, with housing and other debt from the September quarter 1988, to March quarter 2026. Debt other than housing is the difference between the two published ratios.
Debt other than housing followed a different path. It rose from 31.8% of disposable income in 1988 to a high of 52.7% in the June quarter of 2007, and has since fallen to 43.1%. Over the past two decades, the rise in household debt relative to income has come entirely from housing debt.
Since rates began rising
The Reserve Bank raised the cash rate thirteen times between May 2022 and November 2023, from 0.10% to 4.35%. Over that period and the two years after it, both debt ratios ended lower. The household debt ratio declined from 185.0% in the June quarter of 2022 to a low of 176.5% in the September quarter of 2025. The housing debt ratio declined from 138.5% to a low of 132.4% in the March quarter of 2025.
Debt did not shrink over this period. Lending for housing continued to grow: housing credit rose 7.9% in the year to June 2022 and 4.2% in the year to December 2023, and has not fallen in any year since the series began. Housing credit measures lending by financial institutions rather than the debt in these ratios, but the two move together. Household disposable income grew faster than debt, so the ratios fell.
Household debt and housing debt, % of annualised household disposable income, 2021–2026
Source: Reserve Bank of Australia, Statistical Table E2, quarterly, March quarter 2021 to March quarter 2026. The cash rate target was 0.10% until May 2022, rose to 4.35% by November 2023, was reduced in February, May and August 2025, and was increased in February, March and May 2026.
The picture has changed over the past year. The Reserve Bank reduced the cash rate three times in 2025, to 3.60%, and housing credit growth picked up to 7.3% in the year to March 2026. The housing debt ratio rose 2.2 points from its March 2025 low, to 134.6%, while the household debt ratio was little changed, at 177.7% against 177.5% a year earlier. The cash rate was raised in February and March 2026, within the latest quarter measured, and again in May, after it, returning the target to 4.35%.
Housing’s growing share of household debt
In 1988, housing accounted for about half of household debt, 50.1%. The share rose to 69.5% by the June quarter of 2008 and to 72.5% by the June quarter of 2019, and in the March quarter of 2026 it reached 75.7%. The household debt ratio is back near its level of mid-2016, but it is now made up more heavily of housing debt.
Housing debt as a share of household debt, %, 1988–2026
Source: Reserve Bank of Australia, Statistical Table E2; calculated as the housing debt to income ratio divided by the household debt to income ratio, September quarter 1988 to March quarter 2026.
Reading the ratios
Relative to income, household debt in March 2026 is 10.0 points below its 2018 high and 7.3 points below its level when rates began rising, and housing debt makes up a larger share of it than at any earlier point in the series. The ratios describe debt and income across all households combined. They do not show how debt is spread between households, how much is held against savings in offset accounts, or what share of income goes to repayments. Movements in interest rates and their effect on the economy are compared with long-run averages in APN’s comparison of the economy against its fifteen-year averages.
Findings are presented on the basis of data and evidence alone.
