[ad_1]
Financial survival has eclipsed the Great Australian Dream of property ownership.
Australians now rank financial worries brought about by the skyrocketing cost of living as their number one concern.
While half say they will have significant challenges meeting their expenses and debt repayments this year, only 12 per cent identified saving for a home as their number one financial focus.
The disturbing findings are drawn from two major surveys that looked into the financial plight, plans and priorities of households around the country.
With inflation showing no signs of slowing after a 6.1 per cent increase in the June quarter, research reveals that the rising cost of living ranks number one for financial worries among Australians, with 61 per cent identifying it as their top concern.
A survey of an independent panel of 1018 Australian mortgagors was commissioned by finance platform, Money.com.au.
Having a financial buffer in case of an emergency ranked second on the list – chosen by 43 per cent of mortgagers.
Having enough cash flow to pay bills ranked third, chosen by 39 per cent of respondents, while meeting healthcare costs and private insurance, and being able to afford non-essential spending ranked an equal fourth, with 36 per cent of respondents choosing these as their largest worries.
With inflation complementing interest rates on a runaway splurge, the dream of home ownership is fading for many Australians.
Borrower worries
A separate survey of more than 2,000 people carried out by superannuation company Equip revealed that growing their savings was the top financial priority for one in five Australians (22 per cent), closely followed by covering living costs (19 per cent).
Both were rated well ahead of saving for a home as priorities (12 per cent).
Helen Baker, licensed financial adviser and spokesperson for Money.com.au, said it was surprising to learn that mortgage repayments are not as big a concern across the board as rising prices but offered some potential factors.
“Firstly, the finding suggests that many mortgagors are likely to have built a buffer in their offset accounts or on their loans to weather rate rises – even though 43 per cent of respondents didn’t have a separate buffer for other emergencies.
“Secondly, I believe mortgagors have some faith that institutions such as the RBA won’t raise rates to a level that will create a crisis among a large proportion of borrowers, and potentially a housing market crash.
“Thirdly, some borrowers don’t monitor financial news or may not be as financially savvy as others, might not be well versed on the ins and outs of their home loan, and may not understand that in an environment of high interest rates they may not be able to meet repayments.
“However, rate increases will create distress for a significant minority, with more than a quarter (27 per cent) of borrowers in our survey indicating they are very worried.”
There’s no point pretending these rate rises don’t hurt – they do and they will.
– Jim Chalmers, Federal Treasurer
They have every reason to be concerned.
Federal Treasurer Jim Chalmers economic statement to parliament would send a shiver down the spine of the 43 per cent of respondents who said they had no financial buffer.
Inflation is now expected to peak at 7.75 per cent in the year to December. It will still be at 5.5 per cent by mid next year, on the new estimates.
Real wages are forecast “to start growing again in 2023-24,” Mr Chalmers said.
Australia’s growth forecast for this financial year has been reduced from 3.5 to 3 per cent. For 2023-24, the forecast is down from 2.5 to 2 per cent.
“A lot of people are living pay cheque to pay cheque for whom this inflation will be devastating because it’s getting harder and harder for them to substitute things out of their household budgets,” he told a news conference.
He later added: “There’s no point pretending these rate rises don’t hurt – they do and they will.”
And anyone with thoughts of saving for a house deposit who thinks otherwise may be dreaming.
[ad_2]
Source link
