Data from the Australian Bureau of Statistics (ABS) has revealed a significant portion of Australians who received government stimulus in the month of May directed it towards servicing their debt.
According to the survey, one in four used the money for paying household bills (42%), adding to savings (40%) mortgage and rent payments (14%) or to pay down credit card and personal debts (12%).
Even with social distancing measures confining the bulk of the population to their homes over the period, just 6% of respondents reported using the payment for ‘recreational and leisure items such as streaming services’.
“For years we’ve seen headlines that the next generation are spenders and smashed avo eaters but these findings show that Aussies are conscious and considered savers, who - when needed - will tighten their belt,” noted Loan Market executive chairman Sam White.
“We’ve seen this happen many times before; people will do the right thing to get ahead when the circumstances call for it. Even as we were cooped-up at home, people recognised their mortgage was more important than what movie services they could stream.”
According to White, Loan Market data charting the increase in refinancing activity to 1 July adds to this narrative; in times of uncertainty, customers are not only willing to tighten their expenses, but will likely turn to their broker for expertise and service.
“From an industry perspective, it’s encouraging to see Australians make use of the Federal Stimulus Payment to lessen their house, investment, credit card or personal loan commitments during a time of uncertainty," he said.
“2020 has shown brokers that, more than ever, the market is seeking support in controlling their debts. These findings show borrowers understand the importance of getting on top of their debts which is a major part of brokers’ educational piece.
“During COVID-19, people have felt as though there’s so much beyond their control; but brokers can help them take control of their finances, and that’s of great importance to them.”