"There was one lesson from the [global financial] crisis I didn't talk about two years ago that is relevant to today: be careful of removing the stimulus too early," Mr Debelle said at the Australian Business Economists webinar today.
"A number of European countries learned this lesson to their cost after the global financial crisis.
"Absent the fiscal support, the Australian economy would be much weaker with the consequent economic and social damage."
Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.
Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of December 10, 2023. View disclaimer.
Currently, both JobKeeper and the boosted JobSeeker rate are set to end in late March 2021.
Despite the cost of stimulus to the government budget, Mr Debelle said "public debt is very manageable", with public sector debt remaining low as a share of gross domestic product (GDP).
Private debt, however, remains some of the highest in the world, with household debt at 119% of GDP, second in the world only to Switzerland.
The 119% figure was measured in March 2020, and Mr Debelle said in that time household savings have skyrocketed.
"Household incomes have been boosted by the support through the JobSeeker and JobKeeper programs," he said.
"These have all contributed to a very large increase in household savings, further bolstered by the constraints on household spending through the period."
Mr Debelle also said lower borrowing rates tend to benefit younger people.
"Those who depend on interest income are generally aged over 65," he said.
"Back when the cash rate was at 1.5%, around 5% of these older households were earning more than one-fifth of their income from interest."
Deeming rates have so far not been reduced after the Reserve Bank's cash rate cut to 0.10% earlier in November.
The rates, which the government 'deems' pensioners' assets to be earning, are still at 0.25% on the lower threshold, and 2.25% at the higher threshold.
The highest savings account rates are generally under 2% per annum, as seen in the table below.
All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product.
By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of December 10, 2023. View disclaimer.
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