Half of Aussie households face financial risk
ING DIRECT has conducted a study of Australian households, finding one in two face financial vulnerability if the main income earner experienced unemployment. This is despite the fact home loan interest rates are at record lows.
The research found a high 49% of households said they would have less than three months of income at their disposal if the main income earner was to lose their job.
The ING DIRECT Household Financial Fitness Test also looked at how quickly a household could pay off an unexpected bill of $10,000, in the scenario of a job loss.
When it came to paying off that $10k, 45% indicated they would struggle to pay off the unexpected expense within three months and 38% of households would take six months or more, which rises to 55% for renters.
Executive Director at ING DIRECT John Arnott said the solution was for Australian households to “build a pool of savings” that can provide a buffer in financial emergencies. “It’s not always easy, but aiming to set aside small amounts regularly can be the starting point to growing emergency funds and improving financial fitness.”
ING DIRECT’s findings weren’t all negative, with the vast majority of households at 95% stating they are comfortable with their mortgage, 87% comfortable with their ability to pay regular household bills and 84% comfortable with household income.
However, Arnott warned that the low rate environment won’t be around forever and that “homebuyers need to be mindful that rates can rise.”
“Make sure you don’t overcommit with your borrowings, so when rates eventually start to rise again you’ll be in a strong position to be able to manage your finances and maintain your lifestyle.”