Financial Vulnerability Assessed Using Microdata

Another NZ example, this time from the NZ Fed

Financial vulnerability of mortgage-indebted households in New Zealand - evidence from the Household Economic Survey

Aggregate household debt more than doubled between 2001 and 2008, alongside similarly rapid increases in house prices. Aggregate data, however, cannot tell us which types of households – by income and assets – have built up the most debt over the period, which is important for assessing their financial vulnerability. This article uses information from the Household Economic Surveys (HES) for 2001, 2004 and 2007 to provide some evidence on this issue. The survey evidence suggests that, overall, financial vulnerability in the household sector did not greatly increase over the period of strong house price rises this decade. Simple modelling suggests that some households would, however, be vulnerable to simultaneous large shocks to house values, interest rates and employment.