Australian financial institutions need to recognise that business and household deleveraging is not a short-term response to the financial crisis and will be a feature of the economy for some time, a leading economist said yesterday.Deloitte Access Economics director Chris Richardson told delegates at the Australian Mortgage Conference in Sydney yesterday that interest rates would continue to rise in the year ahead, by as much as 100 basis points, and stay at elevated levels into 2013.Australian households will reduce debt and build savings. The country's household debt to income ratio, which is around 150 per cent, has peaked.Meanwhile, the household savings ratio has been climbing since 2005 - from zero to around 10 per cent of disposable income.Richardson said: "The main game, for longer term finance sector growth, will come down to debt-to-income ratios, and they may well have peaked."For 20 years we were prepared to increase our borrowings more than our incomes were growing. Rates were low and people could create wealth in residential property."That is changing and it will change the financial services industry. The GFC was a wake-up call, but it was not the only factor in the change. "Borrowing rates will fall. Savings are the thing."