Financial stress in Australia has stabilised near a two-year low as a combination of post-election confidence, low interest rates and increased savings help to bolster consumer demand for credit and their capacity to repay.
The financial position of Australians has settled in the past two months, with D un & Bradstreet's Consumer Financial Stress Index moving to 11.8 points for September, a slight increase on the 11.5 points in August.
Despite easing to healthier levels this year, the index has stabilised at a level that remains significantly higher than measured between 2009 and mid-2011.
Additionally, there is a risk that financial stress could rise in the lead-up to the Christmas holiday period as consumers look to borrow and spend with renewed confidence.
Consumer debts often accrue during the Christmas period, with the repayment problems becoming noticeable in the New Year.
In January this year, the volume of debt referrals to D&B grew by more than 15 per cent from the previous quarter. At the same time, the Consumer Financial Stress Index reached 24.9 points, its highest point in the three-and-a-half years of the index as a greater number of consumers with a poor repayment history applied for new credit and the economy struggled to generate momentum.
The consequence of missed bill payments takes on particular significance this year with new credit laws providing scope for banks to begin recording bill payments that are made five or more days late.
The decline in financial stress this year has been supported by falling interest rates, while consumers have also built healthier levels of savings.
