Written by James Hurwood
The average debt of an Australian household grew to $261,492 in 2021-22, up 7.3% from the previous year.
Household debt grew fastest for the country’s lowest earners at 8.2%.
Those aged 35-44 had the most debt of any age group, with an average debt of 1.73 times the average of all Australian households.
You can figure out both your current and potential DTI (if you’re looking to take out a loan) with the same simple formula: your total debt divided by your gross income.
For example, if you’re seeking a $700,000 home loan with no existing debt on your hands, and your gross income is $160,000, your DTI would be 4.375.
Australia’s average household debt was $261,492 in 2021-22 – up 7.3% from the previous year (2020-2021). Meanwhile, average household gross disposable income was $139,064, which is only up by 3.7% from the year prior. That would mean that Australia’s average debt-to-income ratio is about 1.88 – a number most lenders would be quite happy with!
| Income quintile | Average debt per household | Gross disposable income | Average debt-to-income ratio |
| Lowest | $124,063 | $54,134 | 2.29 |
| Second | $145,001 | $86,689 | 1.67 |
| Third | $237,285 | $117,495 | 2.02 |
| Fourth | $342,877 | $154,434 | 2.22 |
| Highest | $544,339 | $288,311 | 1.88 |
| Source: Liabilities, Australian National Accounts: Distribution of Household Income, Consumption and Wealth (ABS, 2022). | |||
While there’s no firm rule for what constitutes a good or bad debt-to-income ratio, we can look at the maximum DTIs that major lenders will accept when assessing a home loan application to get an idea of what DTIs may be typically considered ‘too risky’.
For example, as of mid-2022 ANZ has said it won’t accept loan applications with a DTI of more than 7.5 and NAB dropped its maximum DTI from 9 to 8.
Additionally, Westpac’s credit team manually assesses any loan applications involving a DTI of seven or more, and CBA has said that it subjects applications involving a DTI of six or more to “tighter lending parameters”.
Australia’s wealth gap is getting wider. The nation’s lowest-income households saw their debt grow the most at 8.2%, whereas the highest-income households had the slowest-growing debt at 6.6%.
At a base level, a higher household income appears to correspond with a decreasing debt growth rate; the exception was the second and third income quintiles, which both saw an 8.1% increase in debt in 2021-22.
| Income quintile | Debt growth rate (2020-21 to 2021-22) |
| Lowest | 8.2% |
| Second | 8.1% |
| Third | 8.1% |
| Fourth | 7.5% |
| Highest | 6.6% |
| Source: Liabilities, Australian National Accounts: Distribution of Household Income, Consumption and Wealth (ABS, 2022). | |
Those aged 15-24 had the least debt by far with 0.28 times the average debt of all households, but also had the least in assets with only 0.30 times the assets of the average of all households. Australians aged 25-34 don’t have too much more in assets on hand than their younger counterparts (only 0.49 times the average assets of all households), but had over four times as much debt with 1.14 times the average debt of all households.
Household debt appears to peak between the ages of 35 and 54 before decreasing in older age, whereas the value of household deposit assets steadily increases over time.
| Age groups | Debt (ratio to the average of all households) | Deposit assets (ratio to the average of all households) |
| 15-24 | 0.28 | 0.30 |
| 25-34 | 1.14 | 0.49 |
| 35-44 | 1.73 | 0.53 |
| 45-54 | 1.51 | 1.02 |
| 55-64 | 0.93 | 1.34 |
| 65+ | 0.18 | 1.49 |
| Source: Debt and deposit asset ratio to the average of all households by age groups for 2021-22 (ABS, 2022). | ||
Australia has the fifth-highest national average debt-to-income ratio of the 38 member countries of the OECD, according to the most recent OECD data.1
The average Australian household’s debt represents 211% of its net disposable income, followed by:
The country faring best when it comes to household debt is Mexico, in which the average household’s debt stacks up to a meagre 26% of its net disposable income.
| Country | Average household debt as % of disposable income |
| Mexico | 25.62 |
| Latvia | 37.20 |
| Brazil | 44.76 |
| Hungary | 45.08 |
| Lithuania | 45.44 |
| Colombia | 51.71 |
| Slovenia | 51.99 |
| Poland | 59.08 |
| Chile | 67.40 |
| Czech Republic | 77.31 |
| Estonia | 79.37 |
| Slovak Republic | 85.09 |
| Italy | 90.76 |
| Greece | 92.69 |
| Austria | 94.35 |
| Spain | 101.14 |
| United States | 101.19 |
| Germany | 101.51 |
| Ireland | 111.41 |
| New Zealand | 116.47 |
| Belgium | 119.76 |
| Japan | 121.58 |
| Portugal | 123.05 |
| France | 125.62 |
| United Kingdom | 148.41 |
| Finland | 154.93 |
| Canada | 186.90 |
| Luxembourg | 193.19 |
| Sweden | 200.98 |
| Korea | 206.48 |
| Australia | 211.44 |
| Denmark | 215.12 |
| Netherlands | 222.07 |
| Switzerland | 227.41 |
| Norway | 246.42 |
| Source: National Accounts of OECD Countries. (OECD, 2022). | |
