Jessica Irvine, Eric Johnston, Gareth Hutchens June 09, 2012
The decade-long debt binge by households is to blame for the weakened retail, housing and banking sectors ... Reserve Bank governor, Glenn Stevens. Photo: Tamara Voninski
THE Reserve Bank governor, Glenn Stevens, has issued a rousing call to Australians to start seeing the glass as half full, while also warning of slower house price growth ahead.
Mr Stevens said by cutting official cash rates this week it was not his intention to reignite another house price boom, and nor did he believe this would happen.
Stevens's comments came as the ANZ capped a week of positive economic news by announcing it would pass on the full 0.25 percentage point cut by the Reserve Bank, saving a household on a $300,000 mortgage $48 a month.
Other major banks weren't so generous. Westpac, which ranks as one of the biggest home lenders, has decided to pass on just 0.20 percentage points, blaming the higher cost of raising deposits for holding back the full cut. Westpac's new variable home loan rate is 6.89 per cent. Commonwealth Bank cut its rates by 0.21 percentage points to 6.8 per cent, the same level as ANZ.
NAB dropped by 0.21 percentage points to 6.78 per cent.
Still, the Treasurer, Wayne Swan, said the ANZ move throws ''the gauntlet down to the other big banks''.
He urged customers to shop around. ''They will rightly be very upset with their bank,'' he said.
Speaking in Adelaide, the RBA's Mr Stevens pointed to deflation in house and share prices as the major reason why households felt so ''unrelentingly gloomy''.
''Even before the recent turn of events in Europe and their effects on global markets, we were grimly determined to see our glass as half empty,'' he said.
Amid talk of the two-speed economy, Mr Stevens said it was wrong to say the mining boom was the only reason parts of the economy were suffering.
The real reason for the weakness in the retail sector, the housing market and banking was not the higher dollar, but the end of a decade-long debt binge by households.
The value of household assets - principally dwellings - rose by more than 6 per cent per annum above inflation in the years before the global financial crisis. Wealth would ''sooner or later'' begin to grow again, but settle in the longer term at ''something more like 3 per cent''.
''The decade or more up to about 2007 was unusual. It would be quite surprising, really, if the same trends - persistent strong increases in asset values, very strong growth in per capita consumption, increasing leverage, little or no saving from current income - were to re-emerge any time soon.''
Mr Stevens said this was, in fact, a good thing and would help to build the resilience of household balance sheets. ''The period of household gearing up could have ended in a much less benign way,'' he said.
''For Australians, the glass is well and truly half full.''
Economists saw Mr Stevens as endorsing the new thrift among households since the crisis, while the central bank was in no hurry to reinflate house prices.
Ben Collier from McGrath Real Estate said post-crisis most home owners wanted to sell their house before buying a new one.