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Australia Housing a Significant Source of Risk, Inquiry Says

An increase in Australian housing debt since 1997 and banks’ exposure to mortgages are a significant source of risk to the country’s financial system, according to a government inquiry.

Since a previous financial sector review, “household leverage has almost doubled,” the five-member panel led by David Murray said in an interim report released today. “Higher household indebtedness and the greater proportion of mortgages on bank balance sheets mean that an extreme event in the housing market would have significant implications for financial stability and economic growth.”