The hoped-for soft landing of the Australian housing market took another hit with the release of the latest housing finance data showing the biggest annual fall in housing finance commitments for nearly eight years. Both the Reserve Bank and the International Monetary Fund have recently pointed to concerns about the level of household debt as we reach a decade since the global financial crisis.

Ten years ago in October 2008, the Reserve Bank hit the panic button. It cut the cash rate by 100 basis points, just a month after it had lowered it by 25 basis points. It wasn’t finished. The following month it cut another 75 basis points, and then in December yet another 100 basis points were dropped, only to be repeated in February 2009, before the final 25 basis point cut occurred in April.

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All up the cash rate was now 3.25% points lower than it had been just seven months prior.

Even more astonishing for us now, removed as we are from those heady days, is that this meant the cash rate in April 2009 was 3.00% – double what it is now.

For anyone who was left breathless at the crisis-level interest rates, probably the only thing more surprising than the speed at which interest rates had been cut would be to learn that within a decade the cash rate would be at 1.5%, and that while the economy was growing solidly, housing finance would be collapsing.

And yet that is where we are at.

In October, the ABS calculates that total value of housing finance commitments was 9.9% below what is was 12 months ago – the biggest 12-month fall since December 2010 in trend terms. The fall in investor housing financing commitments was 17.7%, but it would be wrong to suggest the drop was all due to investors – owner-occupier financing is down 3.6%:

Sometimes the trend figures can be a bit too slow to show changes in the market, but even the more erratic seasonally adjusted figures provide no relief – down 2.7% in the month of October alone and down 13.6% over the past 12 months:

While the fall in investor lending is not too surprising given the tightening of limits on such loans, the fall in owner-occupier housing reflects a concern that is greater than just investors not believing they will be able to make either a capital gain or negative gearing benefit from a rental property.

The number of owner-occupier loans taken out in October was 10.5% below that of 12 months prior – the biggest fall since February 2011:

This all suggests that housing price growth will continue to fall for the next six months at least, especially as the drop in housing finance commitments is quite widespread across most states:

And that brings worries about the stability of our financial sector due to the record levels of debt held by Australian households.

The Reserve Bank pointed to this in its latest Financial Stability Review, in which it noted that “notwithstanding the recent moderation in the growth of debt and change in its composition, households’ high outstanding stock of debt remains a concern. Households with a high debt burden could cut back on their spending if economic conditions were to deteriorate.”

In June the value of Australian household debt reached a record level of 190% of household disposable income:

The RBA noted that while for the most part the value of a household’s assets was greater than its debt, “for most households, almost all of their wealth is in relatively illiquid assets, such as housing and superannuation.” This makes for difficulty in selling assts to make repayments should the economy turn bad and unemployment rise.

The RBA suggests that “at present, households in aggregate appear well placed to manage their debt repayments” but it notes that “reliable and relatively timely indicators point to pockets of household financial stress, but this is not widespread.”

The IMF is perhaps a bit more worried about household debt levels than the RBA, notwithstanding its relatively upbeat outlook for Australia’s economy.

In its latest World Economic Outlook, the IMF improved its predictions for Australia’s GDP growth this year, but revised down predictions for growth in 2019 and 2020:

The blame for this downward revision can be placed on Donald Trump.

The IMF noted that “the downward revisions to the 2019 growth forecast for Australia and Korea … partially reflect the negative effect of the recently introduced trade measures” – ie the tariff battle started by Trump with China, Canada and Europe.

But the IMF still sees our unemployment rate falling below 5% within the next two years – indeed it has a more positive outlook than did the Treasury in the May budget. Given Treasury advises the IMF on its projections it will be interesting to see if the December mid-year economic and fiscal outlook has a more upbeat outlook:

But the IMF also released its latest Global Financial Stability Report, which specifically mentioned Australia along with Canada and the Nordic countries as places where “the ratio of household debt to GDP” was “on an upward trajectory” and which stood out “as a key area of concern”. And it noted alone that Australian “house prices have started to reverse course in major cities and nationwide since late 2017”.

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With interest rates at record lows, it is always worth remembering that while the government may be boasting of retuning the budget to surplus, and is thus slowing the economy, the RBA still has its foot on the economic accelerator. And yet the ability for the current level of low interest rates to increase economic activity appears to have worn off.

For the most part that is not a concern. The government is returning to surplus, but also appears likely to keep spending as we enter election season, meaning austerity is very much on the backburner. But as the IMF notes, the risk from international economic headwinds remains paramount – especially should the US-China-Europe trade battle turn into a war.

And then we will find our households with record debt and little room for the Reserve Bank to cut rates – and certainly nowhere near like they were able a decade ago.

• Greg Jericho is a Guardian Australia columnist