Falling interest rates have helped Australian households take on increasing amounts of debt according to figures from the Reserve Bank of Australia.

According to the RBA figures, the ratio of housing debt and housing debt to disposable incomes both sit at record highs of 186.3% and 133.8% respectively as of December 2015.

In the 12 months to December 2015, the ratio of household debt to disposable income increased by 3.4%, while the ratio of housing debt to disposable income increased 4.3%.

CoreLogic RP Data research analyst Cameron Kusher said those debt levels are mainly a result of the current cost of residential housing in Australia.

“Australian households are heavily indebted due largely to residential housing and while high; the value of the assets held is much greater than the debt. It’s important to consider that this is a national view. Across different regions the ratios are likely to be substantially different,” Kusher said.

“Furthermore, lower interest rates and a fairly strong labour market over recent decades have contributed to a willingness to borrow. Should either of these factors to change it could lead to a dramatic deterioration in the value of these assets while of course the debt would remain,” he said.

While there has been an increase in the ratio of debt to disposable incomes, Kusher said households have at the same time seen an increase in the ratio of the value of their household assets compared to disposable income.

“The ratio of household assets to disposable income is still lower than its previous peak in December 2007 at 476.2%, however, it is nudging back up towards its previous record high,” he said.

“The value of household assets is significantly greater than the value of the debt. Based on this data, the ratio of household debt to assets is 21.6% and the ratio of housing debt to housing assets is 28.4%.”

While some Australian households maybe left vulnerable if there was sudden market upheaval such as an interest rate rise, Kusher said many Australian mortgage holders seem to have been preparing themselves for a worst case scenario.

“Mortgage arrears remain low and the Reserve Bank has reported that the typical mortgage holder is currently more than two years ahead on their mortgage repayments.

“This coupled with higher rates of household savings provide a potential buffer if unemployment were to rise sharply or interest rates began to increase.”