3 in 4 Australians worried about their financial wellbeing

• Comes as inflation reaches 7.3%, and interest rate rises continue to bite households
• If rates rise to the level expected, and are passed on full to borrowers, repayments would be $776 more expensive than in May
• NAB survey has found that just 23% of Australians think it is a good time to buy

With 2022 dominated by skyrocketing inflation and interest rates rises, new research from Mozo.com.au has found that three in four Australians are concerned about their financial future.

“We are starting to see the full effects of back-to-back interest rate rises and skyrocketing inflation with the majority of Aussies now admitting they worry about their finances,” said Claire Frawley, Personal Finance Expert at Mozo.

More concerning is that, as we near the festive season, one in five of those surveyed they now spend several hours a day worrying about their financial future.

The survey’s findings come after the Australian Bureau of Statistics (ABS) revealed that inflation has risen to 7.3%, the highest in decades.

The research also found that grocery bills are now causing the same stress levels seen with those making repayments on a mortgage.

“Now is the time for people to really step back and cut waste out of their household budgets where possible, especially as end of the year creeps closer,” added Ms Frawley.

Interest rate rise for next week

In its upcoming monthly meeting this Tuesday – Melbourne Cup Day – the Reserve Bank of Australia (RBA) is expected to lift the cash rate by 0.25%, to 2.85%.

If this rate increase is passed on in full to borrowers with a $500,000 mortgage, repayments would be $776 more expensive than in May.

Source – Mozo

Currently, the average variable home late in Mozo’s database is 5.18%, 154 basis points above the lowest rate in the Mozo database – 3.64% with the Police Credit Union.

Is it good to buy, sell or renovate?

In light of Mozo’s findings, what about the other end of the spectrum – those who are thinking about buying or selling?

NAB has found that just 32% of Australians think it is a good time to sell a home, with this decreasing slightly to 32% for an investment property. This may not be surprising giving numerous reports of declining house prices, although much of the market is still above pre-Covid highs.

Despite rising interest rate rises, the number of Australians who believe now is a good buy a home has risen from 18% to 23% over the past quarter.

However, sentiment around buying an investment property has remained virtually unchanged, at 21% compared to 20% the previous quarter. This is despite the national rental shortage, resulting in high rents.

Each state and territory excluding the ACT saw home-buying intentions rise, although the number of Australians who felt now was a good time to get a mortgage fell to just 13%, from 19% in Q2 and 27% at the start of this year.

Just 10% of Australians believe it is a good time to renovate a property – wise to suggest this is due to ongoing material and labour shortages.

“The housing market has softened further, and this looks set to continue as the impact of higher rates continue to flow through,” the NAB report said.

“Higher rates are expected to impact all regions, particularly where affordability constraints are most binding. We continue to see the price declines stemming from an adjustment to borrowing capacity as interest rates rise – rather than a fundamental
over-supply of housing.

“Indeed, the rental market has tightened significantly with vacancy rates falling to low levels in all capitals through 2022.”