Renters, refinancing, credit card debt: This week’s best banking news
- Renters financial comfort compared to homeowners
- More Aussies taking on new loans, but refinancing takes a dip
- Credit card debt lingers for 50% of Aussies
- JobKeeper and loan deferrals drawing to a close: what it means for loan repayments
- Ways to avoid financial stress as a fresh parent
- February 2021: Mozo’s Banking Roundup
All in this week’s best banking news: editor’s pick.
Homeowners more financially comfortable than renters, finds ME Bank
ME Bank’s latest Household Financial Comfort Report has revealed that Aussies that own homes are more financially comfy than those with a home loan or renting.
In fact, the bank gave those that outright own properties a comfort score of 6.77 out of 10 - compared to 5.63 for mortgage holders and 4.95 for renters.
The research also showed that 1 in 5 renting households are paying over 50% of their disposable income towards rent. While 3 in 5 are paying over 30%.
While these are some large numbers, it’s actually a slight decrease from June 2020 which was 5% and 6% higher, respectively.
Read full article: ME Bank report: Homeowners more comfortable, but what about renters? for more of the latest stats.
More Aussies taking out new loans but not as many refinancing outdated ones
Owner occupiers and investors in Australia took out a massive $23.7 billion worth of new home loans over January 2021.
This is according to new numbers released by the Australian Bureau of Statistics (ABS) on Monday.
While it’s the number in real terms (meaning not seasonally adjusted), the figures are $6 billion greater than the same time in 2020 and almost $10 billion higher than 2019.
However, for refinancers the story is different. The ABS recorded over $15.6 billion worth of refinanced home loans over January. This figure is slightly lower than January 2020 which recorded $15.8 refinanced loans.
Read full article: Australians are rushing to borrow but are they as keen on refinancing their home loans? and check out if borrowers are missing out by not switching out their current loan.
Half of Aussie credit card holders still have Christmas debt
New Mozo research has shown that over half (52%) of Aussies used their credit card for Christmas spending and 56% are worried about how they’ll pay it off.
On the other hand, when it comes to Buy Now Pay Later only 10% of spenders decided to use such platforms to cover Christmas costs.
“Although there has been a lot of hype around the popularity of buy now pay later services, it seems that when it comes to the crunch credit cards are still one of Australia’s most popular forms of payment, particularly when it comes to spreading the cost of Christmas” says Mozo Director, Kirsty Lamont.
According to new numbers released by the RBA, Australians’ collective credit card debt sits at $20.16 billion.
Read full article: 50% of Aussies still have Christmas credit card debt for how to pay down your credit card debt with a balance transfer offer.
As JobKeeper and loan deferrals come to an end, repayment stress builds
Almost 12 months has passed since home loan deferrals were introduced in March 2020, as relief during the COVID-19 pandemic.
Recent Mozo research shows that 24% of home loan customers whose repayments are currently on hold don’t foresee themselves being able to service their loan one the repayment freeze has ended.
New numbers from APRA revealed that $32 billion worth of mortgage remain paused right now (1.4% of housing loans). Comparatively, in May and June of 2020 $250 billion worth of home loans had been deferred. But based on APRA’s stats and the sentiment around the loan deferrals expiring, around $7.68 billion worth of loans may be unserviceable in the future (once repayments return).
On top of that, the JobKeeper payment scheme is set to expire on 28 March. Mozo’s research found that a massive 86% of home loan holders who receive JobKeeper payments, rely on the scheme to remain financially afloat.
Read full article: Repayment stress to build as JobKeeper and loan deferral deadlines draw near to find out what other options are out there.
75% of Aussie parents underestimate the cost of having kids, finds CUA
Fresh stats from Credit Union Australia (CUA) have shown that a massive 25% of new parents underestimate the price tag that comes with raising children.
In fact, almost half of those surveyed by CUA said that they wished they had saved up more money before starting a family.
40% specified that it would have been good to save somewhere between $5,000 and $8,000 to cover the costs of a baby.
Read full article: How to avoid money stress as a new parent for a breakdown of the costs you may face and ways to stash your baby savings.
Here’s the Mozo Banking Roundup for February 2021
There was a little bit of action in the banking world over the second month of 2021. Here’s what happened in February:
- In the home loans space, fixed rates remain hot with the best 1 year fixed rate 20bp lower than in January. Some lenders also made cuts to variable rates.
- Some credit card offers were changed but no major adjustments were made to key rates or fees.
- A notable introduction into the world of personal loans was the 0.99% green loan offering announced by a major bank.
- The loan is only for home loan customers and currently the lender is just taking expressions of interest.
- At Call Deposits saw more cuts in February. One former rate leader dropped its condition bonus rate to a low 0.15%.
- Similarly, term deposit rates continue to decrease too. The average for a 1-year investment is 87bp lower than a year ago. Plus, the top rate is 95bp lower.
Read full article: Mozo Banking Roundup, February 2021 for a deep dive into what happened across a range of banking products last month.
Want to find a more competitive home loan product? Check out these options below! Or if you simply want to tighten up your finances this month - take a look at our March 2021 Financial Checklist
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