The return of cheap and easy access to financing for lenders has sparked fears that Australia's heavily geared household sector may take on too much debt.
After the global financial crisis interrupted a multi-decade surge in household indebtedness, Australians are gradually gearing up again.
According to the Reserve Bank, the ratio of debt to disposable income has edged up from 145.1 per cent in mid 2012 to a three-year high of 148.8 per cent last December.
This is still below the peaks from before the global financial crisis, when the ratio climbed above 150 per cent. But some analysts are eyeing the increase and stressing there are limits to how much more debt households can take on.
Nomura analyst Victor German said households would be unable to expand their borrowing like they had throughout the 1990s and 2000s, when borrowing easily outstripped income growth.
''It does not feel like there is a lot more scope for households to continue to leverage up,'' he said.
Between the early 1990s and 2008, household debt to income surged from 50 per cent to more than 150 per cent.
Over the coming years, however, Mr German predicted much slower growth in consumer borrowing, which he said would rise by about 5 per cent a year, in line with income.
The major banks and their smaller competitors have been encouraged by declining borrowing costs in wholesale bond and securitisation markets.
The majority of the credit growth has been financed by deposits. For the past two years all new loans by the major banks have been exceeded by deposits, as Australians have saved more than they borrowed.
Reserve Bank governor Glenn Stevens has expressed his concern that the financial system might not be able to handle an increase in household debt.
''I have not been among the people who say that the present level of household debt relative to income or assets is disastrous,'' he told a parliamentary committee last month.
''I am not in that camp, but I am in the camp that says it is pretty high now and we would surely be asking for trouble if we see a big step up from where we are. So, if we saw that, I would be concerned.''
Experts said global investors and credit rating agencies were watching the issue, and would view a return to faster credit growth dimly.
Commonwealth Bank's head of fixed-income research, Adam Donaldson, said household debt had to be managed to ensure continued access to financing.
Mr Donaldson said high household debt levels would put a cap on interest rates if the RBA pushed the cash rate higher because of heightened sensitivities to interest rates.
''The fact is that the household interest/income ratio is still remarkably high from a long-term perspective - it is one of the few metrics that hasn't yet 'normalised','' he said in a note to clients.
He said high household debt was a constraint on the ability of the housing boom to fuel further growth.
