New Zealand Has High Household Debt Levels – But Does It Matter?

When compared to the size of our economy, New Zealand’s household debt level is one of the highest in the developed world. But one economist argues that how much debt we have is not as important as whether we will be able to pay for it in the future.

In 2015, New Zealand’s household debt level was 91.3 per cent ranking us seventh highest out of 42 countries. Paul Bloxham, HSBC chief economist for Australia and New Zealand, says distribution and serviceability is more important than debt size.

When consumer credit soars, such increases in the levels of borrowing can leave households over-indebted and vulnerable. However, when interest rates are low and there is solid job growth and a favourable distribution of debt together with tightened lending standards, risks to households with high debt can be manageable.