A sharp rise in household deposits of 1.7 per cent ($20.7 billion) occurred in December, APRA figures published Monday show, as the number of Australians sick with the latest coronavirus variant reached record levels.

The increase in deposits came as people shied away from going out in fear of catching the virus and reduced their spending, consumer surveys have shown.

NAB economist Taylor Nugent said deposits increased at the same time as previous virus outbreaks.

Asked on Melbourne radio about the increased savings, Frydenberg said this was due to a number of factors.

He credited the government’s tax cuts and income support, as well as people’s reduced travel, for the greater savings.

Frydenberg claimed people would use their savings to help businesses struggling from the Omicron wave.

“There is that money there that will be spent and will generate economic activity and of course jobs,” he said.

The increased deposits have not stopped people taking advantage of low interest rates, however.

Credit growth for December rose 0.8 per cent on the previous month, Reserve Bank data showed.

This was only a little down on the upwardly revised figure of one per cent for November.

Housing credit growth remained consistent on the previous month at 0.7 per cent.

CommSec senior economist Ryan Felsman said many house hunters wanted to secure low interest rates before anticipated rate rises this year.

Housing credit growth was 7.4 per cent for the 12 months to December. Mr Felsman said this was the highest annual rate in six years.

In October, the Australian Prudential Regulation Authority raised the criteria needed for banks to provide loans. This was due to concerns Australians might be taking on too much debt, mainly for housing.