Household Finances – Page 4 – Digital Finance Analytics (DFA) Blog

One In Eight Mortgage Borrowers “Extend And Pretend”!

Struggling homeowners are increasingly hitting the pricey reset button on their loans in the hope of dragging down their monthly repayments.
It’s adding years to the length of their loans and potentially hundreds of thousands of dollars in interest costs.

A recent Finder.com.au survey revealed one in eight mortgage holders polled revealed they had extended their home loan to lower their repayments over the last year.

In a trend described as “borrowers stuck in mortgage quicksand”, about half of those who had extended their loans had added more than five years to the life of the debt.

This would result in much higher interest costs over the lifetime of the loan, despite cheaper monthly repayment bills in the short-term, Finder revealed.

“Even a small increase in the length of a loan term can add up to big differences in interest over the life of a home loan.”

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Is A 5% Cash Rate For Australia On The Cards?

As I discussed on my live show, on Tuesday night with Leith van Onselen, the RBA decided to hold the cash rate at 4.35%, but there were signs of a more hawkish tone from the meeting notes, and the subsequent press conference (which I might add is becoming less useful each time thanks to weak questions supporting weak answers, come on MSM do your job….)
Bullock was clear, we need more data, there are risks to the upside from sticky inflation, but employment is also an important factor, given their dual mandate.

Just remember folks, the RBA at 4.35% is significantly below several other Central Banks, including the Bank of England, which held rates on Thursday at 5.25%, despite inflation falling to 2% last month, Bank of Canada which cut rates by 0.25% to 4.75% and New Zealand’s Reserve Bank holding rates at 5.5%, despite driving the economy there into recession.

Which begs the question, has the RBA done enough on rates to squeeze inflation out of the economy in Australia, despite being lower the peers, mainly because in Australia a greater proportion of mortgages are linked to variable rates than other countries. Economists are divided, with Leith still holding the next cut will be down, as unemployment rises.

But writing on Monday, before the RBA decided to hold rates on Tuesday, Economist Warren Hogan, at the more bullish end of commentators on RBA rates, wrote in the AFR that the flow of data since the last meeting in early May made it a very close call to hold off on further tightening.

The narrow path is still attainable, but it increasingly looks like we will need to get rates up closer to 5 per cent to stay on it.

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It’s A Taxing Time, But Make Sure You Do It Right! : With Allan Mason

I caught up with accountant, Allan Mason, who was Kerry Packer’s accountant and is the best-selling author of “Tax Secrets of The Rich”. As the tax year looms, its important to take charge of your tax affairs, and we discuss some of the main issues to consider.

https://nla.gov.au/nla.obj-3019211844/view

Note this is not specific tax advice, just a general conversation.

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Digital Finance Analytics (DFA) Blog

It’s A Taxing Time, But Make Sure You Do It Right! : With Allan Mason

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The Kiwi Economy On A Knife Edge… As More Leave!

In this show we will look at some of the recent data relating to the New Zealand economy, which is sitting in a high interest rate, recessionary condition, as the Reserve Bank of New Zealand wrangles inflation towards its targets. We saw a significant rise in people leaving the country, with New Zealand Citizens voting with their feet!

So, we will look at the latest on property prices, retail spending and the latest inflation and migration updates. Overall, things remain very tough, though inflation while remaining sticky, is easing slowly.

So, standing back, clearly the New Zealand economy is not out of the woods yet, but the Reserve Bank of New Zealand’s approach of lifting rates higher than Australia does appear to be pushing inflation in the right direction. The uptick in exits from New Zealand suggests perhaps that some are deciding to jump ship, because households are clearly feeing the pressures. And recent policy changes will likely continue to reduce net overseas migration, with potentially significant impacts on the jobs market, and demand for property.

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Digital Finance Analytics (DFA) Blog

The Kiwi Economy On A Knife Edge… As More Leave!

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Financial Pressure Reports: May 2024 – 1. Overview

This is the first in a series of posts which deep dives into our latest survey results, with a focus on financial stress, which is rising further. This episode provides an overview, subsequent episodes will dive into the details of mortgage, rental, investor and financial stress.

If you want details of a particular post code, drop it in the comments below, and I will endeavour to add it to a later show.

The full 2,000 post code series is available by subscription from our Patreon channel below.

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Digital Finance Analytics (DFA) Blog

Financial Pressure Reports: May 2024 - 1. Overview

00:00 / 00:34:08

Financial Pressure Reports: May 2024 – 1. Overview

If you want details of a particular post code, drop it in the comments below, and I will endeavour to add it to a later show.

The full 2,000 post code series is available by subscription from our Patreon channel. https://www.patreon.com/DigitalFinanceAnalytics

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Go to the Walk The World Universe at https://walktheworld.com.au/

Danger! Inflation Traffic Accident Dead Ahead!

The latest monthly data on inflation from the ABS which came out today reported Annual growth in the non-seasonally adjusted monthly CPI lifted from 3.5 per cent last month to 3.6 per cent, above market expectations, while seasonally adjusted CPI is even higher at 3.8 per cent, and annual trimmed mean inflation (which removes food, fuel and holiday travel) rose to 4.1 per cent, from a low of 3.8 per cent in January.

Consumers were hit with the biggest increase in health insurance premiums in several years, following the annual lift in health insurance premiums, bad weather caused fruit and vegetable costs to rise. The outcome was also driven by higher petrol prices, less household goods discounting, stamp price rises and rents. In fact, both goods and services inflation rose.

While the RBA still considers the quarterly CPI the best gauge of inflationary pressures, the new monthly indicator factors into the central bank’s interest rate decisions, particularly when it delivers an unexpected outcome.

Judo Bank chief economic advisor Warren Hogan said the latest CPI figures would test the RBA’s patience. “Inflation is not falling back to target with signs that inflation’s underlying ‘pulse’ might be picking up in 2024,” he said.

“The RBA was very close to hiking the rate earlier this month. This number could tip them over to raising rates at their next meeting on June 18.”

This is not the progress the Reserve Bank wants to see, especially given the weakness in consumer spending evident across the economy, whether in official retail sales data (which is going backwards in inflation-adjusted terms), or the big profit downgrades in the last week from the likes of listed car dealers Eagers Automotive and Peter Warren Automotive.

With inflation surprising to the upside and the Fair Work Commission to announce next week an increase in the minimum wage, UBS chief economist George Tharenou said there was a “lingering risk” the RBA could be forced to raise the cash rate in the coming months.

Households, already under pressure, continue to feel the pain, as the latest data from Roy Morgan on consumer confidence reported another fall, and the accumulating data from the DFA surveys for May will report a further distressing rise in financial stress: The first results will be reported in the Sunday show, with more detailed analysis to follow.

Markets reacted to the news, with the ASX 2000 down 1.3%, while the 2-year bond rate rose 0.84% to 4.183. The Aussie rose 0.13% against the USD to 66.56 cents. The ASX Rate tracker shows a slight rise to October, and cuts pushed well out into 2025.

So, higher for longer, again, and I would remind you that the RBA’s blunt instrument of interest rate rises is only indirectly hitting many of the sectors of the economy. More significantly, global shipping costs are rising again, with Drewry’s World Container Index up 16% to $4,072 per 40ft container this past week. All major routes are impacted.

http://www.martinnorth.com/

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