With more pressure on brokers to provide accurate borrower expenses, new data shows just how difficult that proves to be.
The research from Commonwealth Bank of Australia (CBA) shows customers do not just lose track of daily expenses, but poorly budgeting holidays can put their expenses out of sync by $1,554.
As a nation, Australia is spending $4.6billion on unplanned holiday expenses.
The research revealed relaxed attitudes to travel budgeting is causing money mishaps, with more than a quarter of Aussies revealing they don’t save any spending money before they go away. One in five people travel without a holiday budget at all.
Once on the holiday, only 36% of people are actually checking their spending each day.
The research revealed this was also having knock-on effect, as people are not budgeting for living expenses back home. Twenty-eight percent admitted to making sacrifices after getting home.
Michael Baumann, general manager everyday banking and payments, CBA, said it was “concerning” people weren’t putting aside extra money.
He added, “Despite advice from family and friends and budgeting tips and tricks for travellers online, over half (55 per cent) said they made an educated guess when working out their holiday spending money. Even more concerning was that a third are not putting aside extra spending money for unexpected expenses or overspend.”
Last month, UBS highlighted the Australian Prudential Regulation Authority’s (APRA) concern on how brokers assessed borrower’s living expenses.
It came to light that lenders were ‘over-relying’ on a Household Expenditure Measure (HEM) benchmark. UBS analyst Jonathan Mott said this benchmark showed only “a very modest or frugal level of household spending”.
ANZ was questioned during the Royal Commission over its admission that it reverted to using this benchmark in 73% of its loan applications.
NAB quizzed on broking practices after half year results
Westpac's mortgage books under fire
Royal Commission probes ANZ's broker-submitted loans