RBA leans against lending plans 19 May 2015 4:05PM Ian Rogers Lenders counting on a surge in demand for household credit to underpin their growth plans may be disappointed, if projections by a senior official of the Reserve Bank of Australia have any validity."It is unlikely to be in Australia's long-term interests to engineer a consumption boom by encouraging people to borrow large amounts against future income," Philip Lowe, deputy governor of the RBA, told the Corporate Finance Forum in Sydney yesterday."Debt levels are already high and prospects for future income growth are not as positive as they once were," Lowe said."So, there is a fairly fine line to tread here. The RBA's recent decisions have sought to strike a prudent balance - to help encourage consumption growth and thus business investment, but avoid the type of imbalances that could cause problems later on. We will continue to assess that balance carefully."Low interest rates were "helping to boost household consumption … by improving the aggregate cash flow of the household sector and boosting household wealth. However, as I have spoken about previously, the overall effect on consumption is probably smaller, or at least slower, than it was in the past," Lowe said."This is because high debt levels mean that households are less inclined than they once were to respond to low interest rates by borrowing to increase their spending. "Notwithstanding this, there is still a spending response to low interest rates and household consumption rose by nearly three per cent in 2014. "This is slower growth than in the period from the mid 1990s to the mid 2000s, but it is faster than current growth in real household income."