New research from NAB suggests the average Australian feels only “moderately” stressed about money or making ends meet, but also only “moderately” comfortable they are on top of their finances, could manage a major unexpected expense, and are on track to have enough money for their future financial needs. But averages mask.
They say over 4 in 10 (43%) Australians experienced some form of financial hardship in Q2, and is now up from 29% in early-2022 amid rising inflation and higher interest rates. Money is “very much” a source of stress for 1 in 3 Australians, and 1 in 4 are struggling “very much” to make ends meet.
Financial hardship can happen at any time, and is often the result of sickness, job loss or over-commitment, but rising interest rates and cost of living is now also causing financial distress in more households.
The worsening financial situation reflects a number of factors. First, the roughly one-third of households with a mortgage are obviously being smashed by the RBA’s 4.0% of interest rate hikes, which has lifted variable mortgage repayments by about 50%. The situation facing this cohort will only worsen if the RBA hikes further. There are also around 500,000 fixed rate mortgages that will expire over the second half of this year, which will reset these mortgages from rates of around 2% to variable rates approaching 7%:
Second, the roughly one third of renting households are experiencing explosive rental growth, especially across the major capital cities: Rental inflation will remain turbo-charged given the federal government is running the biggest immigration program in history amid falling housing construction rates:
Finally, overall cost-of-living pressures are impacting all cohorts, driven by the hyperinflation in energy (gas and electricity) prices along east coast Australia.
3 in 10 Australians do “not at all” feel they could manage a major unexpected expense, and 1 in 5 do “not at all” feel on top of their day to day finances, or believe they are on track to have enough money to provide for their financial needs in the future.
http://www.martinnorth.com/
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