Ah the facts that don’t make headlines…
There are many good news financial stories that are simply not reported on as it’s common knowledge that dramatic shock headlines of doom and gloom gets more readers.
So did you know that National Credit card debt is at a 14 year low and that Australians actually have a comfortable level of Mortgage debt.
Read the article below based on stats from reputable sources.
No. 1: Aussies Are On The Move!
According to a recent survey of almost 1100 property investors, COVID-19 has made Aussies stop and think about their housing preferences. Research statistics revealed by the PIPA Property Investor Sentiment Survey showed that the coronavirus pandemic has meant that 17% of respondents are considering a permanent move to another Australian location.
The most popular reasons given by those who are considering moving were –
- Lifestyle improvements – 78%
- Those who have realised they can live anywhere because they’ll be working from home in the future – 46%
- Affordability of housing - 40%
- Those who have decided that city life is not for them anymore – 28%
- The realisation that money is not the most important thing in life – 16%
All these Australians mentioned above are seriously considering purchasing property in one of Australia’s regional markets.
22% of survey respondents said that regional markets look very attractive and are the most appealing places to purchase property right now. In last year’s survey, that figure was 15%.
No. 2: National Credit Card Debt Drops To 14-Year Low
Surprising statistics just released from the Reserve Bank reveal that, since we entered COVID-19 lockdown, Australians have paid off huge amounts of credit card debt.
The most recent data available is for the months between March and July, which shows that Australian consumers reduced their credit card debt by 16% – dropping from $41.3 million down to $34.7 million. This is the lowest amount of credit card debt since the year 2006.
Not only did consumers pay off old credit card debt between the months of March and July, they also reduced new spending -
- The number of transactions was down by 17%
- The value of transactions was down by 6%
- Simultaneously, the interest accruing on both personal and business credit cards dropped by 20% – from $28.2 billion to $22.5 billion.
These figures show that the response by everyday Australians to this economic crisis has been to reduce non-essential spending.
If you’re one of the many Australians who’s been reducing your credit card debt while on the brink of taking out a home loan, that’s a very smart move! Less credit card debt with a lower credit card limit offers a significant advantage to any potential homeowner when applying for finance.
No. 3: The Majority of Homeowners Have a Comfortable Level of Mortgage Debt
Data just in from APRA (Australia’s banking regulator) and the Australian Bureau of Statistics reveals that the majority of Australian homeowners are well-placed to pay off their loan.
Figures obtained at the end of June reveal that the overall value of Australia’s housing was $7.14 trillion. At the same time, the overall value of outstanding loans in Australia secured by residential property was $2.01 trillion.
These figures show that Australia’s LVR (collective loan-to-valuation ratio) was 29.4% and that most outstanding home loans in Australia are below 81% LVR – the breakdown is as follows –
- 32% of outstanding mortgages are under 60% LVR;
- 47% of outstanding mortgages are 60% LVR to below 80% LVR;
- 16% of outstanding mortgages are 80% LVR to under 90% LVR;
- 4% of outstanding mortgages are 90% LVR to under 95% LVR, and
- 1% of outstanding mortgages are 95% LVR and above.
A substantial amount of money can be saved if you have a deposit of at least 20% when applying for a home loan. Not only will you be able to access more competitive offers with lower interest rates, you also won’t be required to pay LMI (lenders mortgage insurance).
Lenders are looking for low-LVR customers, and they’re competing hard to get them. If you’re in the process of applying for a home loan contact a mortgage broker and let them do the ground-work for you!
No. 4: It’s Time for Banks to Start Un-Pausing Mortgages
It’s truth time for borrowers who put their mortgages on-hold for 6-months at the beginning of the coronavirus pandemic. For many borrowers, their mortgage deferrals will soon be running out of time and, when that time comes, borrowers will be expected to continue paying off their mortgage.
Your lender will discuss your options with you if you’re still struggling financially. It may be that you’ll be offered a further extension of 4-months; or alternatively, they may suggest ways in which you can reduce your monthly repayments, like –
- Moving to interest-only payments; or
- Extending the term of your loan.
The Australian Banking Association has stated that customers who are unable to make their mortgage payments over the longer term will be offered customised support to address their specific needs.
Since Australia entered lockdown 6-months ago, more than 900,000 loans have been deferred, and in the coming weeks we expect to see hundreds of thousands of assessments issued to customers, as follows –
- By the end of September, 65,000 business loans and 80,000 mortgage holders will be issued with assessments; and
- By the end of October, 40,000 business loans and 180,000 mortgage holders will be issued with assessments.