Comparing local borrowers to those in other OECD countries, PIMCO research found that Aussies are basing their decisions to invest on mortgage rates and house prices — not the broader health of the economy or their job security — fearing they will “miss out” on further price appreciation.

This mindset poses substantial risks for the economy because it encourages excess borrowing to pay down properties that may have been purchased at inflated prices not “linked to the productivity of the asset”, the study said.

It added that Aussie households appear to be “trigger happy” about debt, needing only six months of favourable changes in property prices and mortgage rates to start borrowing money again, compared with a year in the US.

Aussie households are just as hasty when prices begin falling, deleveraging from their assets faster and more vigorously than in other OECD countries, making the economy more vulnerable to external forces in China, Europe and the United States.

“Households … are placing little weight on broader fundamentals like unemployment that may be more representative of future incomes or asset prices returns, increasing the likelihood of asset price bubbles,” the study says.

Originally published as ‘FOMO’ puts economy at risk