Would Australians pay off the mortgage with a pay rise?

by AB23 Apr 2014
What would the average Australian do with a 5% pay rise? One fifth would put the money towards their mortgage repayments.
 
The ING DIRECT Financial Wellbeing Index for the first quarter of 2014 shows the proportion of mortgage-free households in Australia is 26% and almost a third of households (31%) are renting.
 
Among households with a mortgage, 42% are paying down ahead of time (down slightly from 49% in Q4 2013) and 4% are falling behind in their mortgage repayments.
 
Across Australian households the median savings level is $14,702 – close to the high level established in Q3 – but 15% of Australian households have no savings.
 
Six per cent of households say their household income is not enough to cover immediate bills and debts, and 7% say it is almost impossible to pay all the monthly bills on time.
 
ING Direct customer executive director of customer John Arnott thought the results were promising.
 
“Although many Australians are experiencing a shortfall of cash between pay cheques, these households are likely to be including savings and debt repayments into their monthly commitments.
 
“With this in mind, Australians continue to take a sensible approach to household financial management.”

The facts:
  • Nearly half (46%) of Australians say they would need an additional $300 or more per week to feel entirely comfortable with their take-home salary.
  • If they were to receive a 5% pay rise, 82% would save it in some way and 11% would spend it.
  • Of those who would save it, 18% would put it towards mortgage repayments, 24% would pay down credit card debts or other bills, 36% would put it into savings, and 5% would make an extra superannuation payment.
  • Of those who would spend it, 8% would take a holiday, and 4% would treat themselves/family.
The index was compiled from the online responses of 1,050 households between 7 April and 11 April 2014. The data was weighted by region and household size to reflect the Australian household population based on the 2006 census.

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