Aussies pessimistic about the future, despite reporting record levels of financial comfort

Father and daughter sitting at table.

Despite still recovering their bearings after a difficult pandemic period, Australian households are as financially comfortable as ever, according to ME Bank’s latest financial comfort report. 

Taking into account 11 different measures including income, living expenses and debt levels, the report put Australian household financial comfort at 6.04 out of 10 in December 2021 — up by 3 per cent in the last year and 8 per cent higher than pre-pandemic levels.

Among the households surveyed, 27 per cent reported their financial comfort levels had improved — largely owing to increased cash savings and improvements around jobs, income and spending. 

Specifically, comfort with cash savings rose 16 per cent since the onset of the pandemic, while comfort around investments jumped up by 14 per cent. Both boosted Aussies’ confidence in their ability to weather a financial emergency. 

At the same time, many households are concerned their circumstances might take a turn for the worse in the future.

One in three households surveyed (32 per cent) believe COVID-19 will negatively impact their finances in the long-term. In comparison, just one in eight households (11 per cent) predict they’ll be better off.

“On the surface, the financial comfort of the average Australian looks better than ever, but it’s fragile – and has begun to fall for many households – especially those with low comfort,” said ME’s consulting economist Jeff Oughton.

“The rising cost of necessities (such as rent, food, fuel, etc.) combined with fixed or stalling income gains and the long-term impacts of COVID-19 is causing financial worry among many households.”

Renters under pressure 

Those worries are weighing on some groups more than others. Renters in particular are feeling the squeeze, with ME Bank finding that two out of every three members of the cohort (67 per cent) were experiencing rental stress.

This was most common among single parents, young singles and couples with no children, and retirees.

Extreme rental stress - which is when more than 60 per cent of someone’s household income goes towards rent - was experienced by almost one in five renters (19 per cent).

“Rental markets have tightened markedly across the majority of Australia and rents have risen significantly due to falling vacancies,” the report said.

“While there have been strong job gains, wages remain relatively subdued, emergency Government support has largely unwound, and rental moratoriums have ended.”

Australians experiencing rental stress

Rental payments as a proportion of disposable income - % of renters. (Source: ME Bank)

The recent reopening of international borders could put further strain on the cohort, as the return of international students boosts demand - and prices - for inner-city rentals.

Things have been markedly different for mortgage holders. Just 35 per cent of Australians servicing a mortgage reported directing more than 30 per cent of their disposable income towards repayments. This is down from 42 per cent in June 2021.

“A fall in the unemployment rate, historically low borrowing costs for home loans rates and the deferral of loan repayments by some households have helped contain mortgage stress,” the report said.

“Furthermore, many households are well ahead of their minimum repayments and have significant net equity or savings in their home.”

For information on mortgage and lending trends, visit our home loans statistics page. And if you’re in the market for a home loan, visit our home loan comparison page, or browse the selection below.

Home loan comparisons on Mozo - last updated 18 April 2024

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure
  • Mozo Expert Choice Badge
    Express Home Loan

    Owner Occupier, Principal & Interest, LVR <90%

    interest rate
    comparison rate
    Initial monthly repayment
    6.01% p.a. variable
    6.14% p.a.

    Get fast online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.

    Compare
    Details
  • Flex Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    5.99% p.a.
    fixed 3 years
    6.37% p.a.

    Competitive Fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

    Compare
    Details
  • Discounted Home Value Loan

    Owner Occupier, Principal & Interest, LVR 70-80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.09% p.a. variable
    6.09% p.a.

    Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).

    Compare
    Details
  • Neat Home Loan

    Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.16% p.a.

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

    Compare
    Details

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.