The build-up of financial risk in Australia’s households has finally started to ease, but the worryingly-high level of household debt we have accumulated in recent years will take years to wear off, the Reserve Bank says.

The RBA has published its latest review of the health of the financial system.

It shows the RBA is pleased with regulators’ efforts to strengthen lending standards in Australian in recent years, saying there are fewer concerns about riskier types of new housing borrowing than there were 12 months ago.

But it has drawn attention to the high level of household debt, saying it increases the risk of future economic negative shocks being amplified across the economy.

“The ratio of total household debt to income has increased by almost 30 percentage points over the past five years to almost 190%, after having been broadly unchanged for close to a decade,” the review says.

“Australia’s household debt-to-income ratio is high relative to many other advanced economies, including some that have also continued to see strong growth in household lending in the post-crisis period, such as Canada, New Zealand and Sweden.

“Household debt in these economies is notably higher than in those that were more affected by the financial crisis and experienced deleveraging, including Spain, the United Kingdom and the United States.”

Economists say it is unsurprising that the RBA is continuing to warn about vulnerabilities in household balance sheets, but say most aggregate indicators of financial stress remain low.

“Overall ... regulatory measures and broader strengthening of lending standards have contributed to an improvement in the risk profile of new housing lending and the resilience of household balance sheets,” Commonwealth Bank economists John Peters and Michael Workman said.

“They have also contributed to the recent moderation in housing market conditions.”

The RBA says global economic conditions have remained strong in the past six months, helping to further improve the health of the global banking system generally.

The review comes after RBA governor Philip Lowe said this week Australia’s painful run of record low wages growth may have finally troughed, with economic conditions improving in every region across Australia as the remnants of the destabilising wind-down in mining investment finally disappear.

He said the economy was likely to grow more strongly over the next two years than it did last year as non-mining investment increased, exports continued to grow, and more people found jobs, leading to a pick-up in wages growth and inflation.

“The latest data suggest that the rate of wages has now troughed, with a pick-up evident in the most recent quarter,” Lowe said during a speech in Perth.

“A further lift is expected, but it is likely to be only gradual,” he said.

The Turnbull government welcomed the expectation that Australia’s run of record-low wages growth may be over, given this week’s news that the government has now trailed Labor for 30 consecutive Newspolls.

The RBA says it is keeping a close eye on the health of the home loan market given “the risk from the stock of existing loans remains.”

But it says the resilience of household balance sheets has stopped deteriorating, thanks to improvements in lending standards that have “contributed to a significant improvement in the risk profile of new lending over the past couple of years.”