A new Reserve Bank report reveals a worrying trend in Australia, with one in 20 mortgage holders spending more money than they earn.
What’s more, tens of thousands of households are at risk of running out of savings by the end of the year.
According to the report, while the majority of homeowners are able to cover their mortgage and day-to-day expenses, 5% are spending more than they earn. While many households have built up their savings during the previous economic downturn, the number of households with less than six months’ savings is now on the rise.
Even at a rate of less than 2%, this affects around 100,000 households who are likely to delay their payments until October unless interest rates fall or wages rise.
At the same time, the report highlights financial market optimism about a soft landing for the global economy, while warning of risks from a slowdown in China’s housing market and other geopolitical turmoil.
In summary, the report emphasises the importance of paying attention to household financial stability, the need to increase savings and to establish safe financial practices.
