Finder data released Wednesday revealed how many Australians have taken on too much debt. Gen Z is by far the highest, with 46 per cent of homeowners saying they had stretched themselves thin.
This is followed by Millennials (37 per cent), Gen X (26 per cent) and finally Baby Boomers (20 per cent).
Mortgage broker Jess Phillips told Yahoo Finance that far too many young prospective buyers don’t have realistic expectations about what they can afford
“This is your first step into the property market and then you leverage this later,” she said.
“It doesn’t have to be the biggest and the best most of the time.”
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Phillips said many Gen Z and Millennial buyers want to tick all the boxes immediately – whether it be price range, suburb location or property size and condition.
Social media and the unrealistic portrayal of people’s lives has a part to play, she said.
“People only ever show the highlights of their day, and it might be 30 seconds and then they just think that they have to keep up with that, and especially in Sydney… it’s crazy what people in Sydney think they have to keep up with,” she told Yahoo Finance.
At least one in three people surveyed by Finder admitted they had borrowed too much to get a property, which is equivalent to more than one million Aussies.
Will you be forced to sell your home if the RBA doesn’t cut interest rates in 2024? Email stew.perrie@yahooinc.com
A separate Finder survey found that nearly one in five homeowners had missed at least one repayment on their loan over the last year.
In January, 35 per cent of home loan holders said they were in mortgage stress, but in October that jumped to 47 per cent, — a record high.
“Households are desperately trying to cut expenses or boost their income to avoid financial strain, but this financial safety net won’t last forever,” Richard Whitten, Finder’s home loans expert, said.
New research by the Australia Institute found the big four banks made $17.6 billion from owner-occupier loans in 2023-2024 out of a total pre-tax profit of $44.6bn.
But Whitten said not all is lost.
Interest rates are expected to drop several times over the next year.
There are also other ways you can take the sting out of mortgage pain.
“Take a fresh look at your situation and think about the best ways to alleviate mortgage stress,” Whitten said.
“Refinancing is a great way to lower your interest rate and reduce your monthly repayments, saving you money over the length of your loan.
“Lenders may also be able to offer you interest-only payments for a temporary period or extend the mortgage term to lower monthly payments.
“This will cost you more interest in the long run, but can offer much-needed relief in the short term.”
Preliminary expectation is for headline inflation to rise by 0.4 per cent quarter on quarter for an annual rate of 2.8 per cent.
All eyes will be on RBA governor Michele Bullock next week as the central bank decides what to do with interest rates. (Source: AAP)
That technically would be in the RBA’s 2-3 per cent inflation target band.
But the board has argued trimmed inflation, which cuts out the impact of temporary measures like government subsidies, gives a more accurate reading of the state of the economy.
This is expected to rise by 0.7 per cent quarter on quarter, giving an annual reading of 3.4 per cent, which is down from 3.8 per cent in the June quarter.
Independent economist Saul Eslake predicts inflation will be cooling but only off the back of government spending.
“The big fall in inflation will almost entirely be attributed to government policy measures, in particular rebates for electricity bills and to a lesser extent Commonwealth rent assistance,” he said.
He added the RBA would unlikely have the confidence to cut the cash rate from 4.35 per cent even if inflation fell, due to the large role government spending was playing on reducing the figure.
“I have always thought the Reserve Bank wouldn’t cut the cash rate until February 2025 at the earliest,” he said.
Commonwealth Bank: First cut in December 2024, with 5 cuts to bring cash rate to 3.10 per cent
Westpac: First cut in February 2025, with 4 cuts to bring cash rate to 3.35 per cent
NAB: First cut in February 2025, with 5 cuts to bring cash rate to 3.10 per cent
ANZ: First cut in February 2025, with 3 cuts to bring cash rate to 3.60 per cent
