Australian homeowners cut back on spending when their mortgage debts are higher, with new research challenging previously-held economic wisdom.

A Reserve Bank of Australia research paper released on Thursday used household spending data to show higher debts mean spending drops.

“We find evidence consistent with a ‘debt overhang effect’ – households cut back on their spending when they have higher levels of outstanding mortgage debt,” the report said.

The research found a 10 per cent increase in debt reduces household expenditure by 0.3 per cent, even when net wealth has stayed the same.

“This suggests that changes in the composition of household balance sheets affect spending, which runs counter to macroeconomic models that combine assets and liabilities into a single measure of net wealth,” the report said.

The report said an increase in owner-occupier debt had important implications for spending across the economy, and goes part of the way to explaining the “puzzle” of unusually weak household spending since the 2008-2009 global financial crisis.

The Australian Bureau of Statistics also released data on Thursday showing the value of new lending to households fell 1.3 per cent in May, after a 0.6 per cent rise in April.

“Most components of new lending to households fell in May, led by weaker lending for owner-occupier dwellings (down 2.7 per cent) and for investment dwellings (down 1.7 per cent),” ABS chief economist Bruce Hockman said.

Personal finance fell 0.7 per cent in May in seasonally adjusted terms, following a 4.2 per cent rise in April, and is down 16.2 per cent year-on-year.