Record low interest rates are encouraging more spending and borrowing, but most Australians are also taking the opportunity to shore up their finances.
Mortgages are being paid off earlier and credit card balances are shrinking, even with card limits on the rise, the Australian Bankers' Association says.
Its latest research shows rising debt levels are more than being matched by the growing value of a family's assets, most notably their home.
Interest payments are also falling in relation to incomes, and people are still saving about nine per cent of their income, the ABA said.
"The trends that we are seeing across a range of household financial measures show that households are equipped to cope with increased borrowings," ABA executive director of industry policy Tony Pearson said.
"They are building resilience into their finances by increasing mortgage buffers and reducing the amount of interest paid on their credit card balance."
With household debt increasing as interest rates fall to record lows, concerns have been raised about household budgets once again being stretched.
But the ABA said the average household was more than two years ahead on its mortgage repayments and credit card balances have been falling for three years.
"At the moment the evidence suggests that households are managing their finances in a prudent fashion," the ABA said.
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