Households are taking on more financial risk by cutting back on insurance, running down savings and resorting to short-term credit as they grapple with inflation and higher interest rates.
The analysis of spending patterns by illion is compiled using credit and banking data from more than 18 million Australian credit consumers. Reduced insurance spending was one of several ways consumers are taking on more risk to manage stretched budgets.“During COVID households built up quite a savings buffer,” said Hasseldine. “But we’ve seen consumer savings balances decreasing quite steadily; at the moment they’re down around about 30 per cent, year-on-year.
Families are also cutting back on fun with spending on entertainment in June 2023 around 5 per cent lower than a year earlier. The data also reveals a 15 per cent fall spending on clothing and furnishings in that period. “The most worrying is home loan repayments – they are late about 15 per cent more often now than they were a year ago,” he said. “That’s a real warning sign.”that 13 per cent of home borrowers with a variable rate loan were spending more on essentials and mortgage repayments than they earned. That compares to just 3 per cent in April 202, before interest rates began to rise.
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Source: FinancialReview - 🏆 2. / 90 Read more »