Brokers may be able to capitalise on consumers’ changing views of debt, even though households are saving more and borrowing less.
The ING Direct Financial Wellbeing Index has shown that Australian households continue to pay down their debts while putting more into savings. Forty per cent of households are paying their mortgage ahead of time, while 56% are paying as it comes due. But ING Direct executive director of delivery Lisa Claes said changing views on debt still present an opportunity for mortgage brokers.
“It’s clear households have changed their view of debt and have prioritised accelerating mortgage repayments. This may present opportunities to brokers who can help their customers utilise their growing equity, for example, as a deposit to purchase an investment property,” Claes said.
The index has shown that, despite a proclivity toward repayments, households are increasingly comfortable with long-term debt. The results indicate 93% of households are comfortable with their home loan, while 63% said they were “very comfortable”, the highest level since the third quarter of 2010.
Consumers are showing a newfound comfort with credit card debt as well, with 56% saying they were “very comfortable” with the balance on their credit cards. The result is the highest level ever recorded by the index.
The index also revealed some troubling results. Nearly one quarter of households said their income had taken a hit in the last 12 months. While 46% said they were earning more than last year, one in 10 had to work longer hours to achieve this.
“It’s good to see households getting on top of debt. However it is worrying to see declining incomes in almost a quarter of households. It is very important for households to budget and cut costs such as unnecessary fees and charges on regular outgoings,” ING Direct chief executive Don Koch said.
Australians sunny about finances in 2012
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