ME bank survey findings reinforces APRA and ASIC’s renewed focus on living expenses
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ME bank survey findings reinforces APRA and ASIC’s renewed focus on living expenses
Meeting living expenses is becoming an increasing struggle for Australians, potentially comprising their ability to meet repayments.
30% of households reported their financial situation worsening, according to ME bank’s Household Financial Comfort Report, with living expenses the main culprit.
Over the past year, 16% of households were ‘not always able to pay their utility bills on time’, while 19% ‘sought financial help from family or friends’ and 13% ‘pawned or sold something to buy necessities’ – a clear illustration of bill stress, ME claims.
“Mortgage defaults may escalate if interest rates increase”, the report warns, “particularly among vulnerable low-income households already dealing with the rising cost of necessities.”
Just under a third of those surveyed by ME said they ‘can just manage to make minimum payments on my debt’ whilst 7% said they could not meet repayments. Both numbers were marginally lower than in December.
Not all bad news
Living expenses matter, say ME, because they have brought down what might otherwise be an improving situation. ME surveyed 1500 Australians for their report, revealing that some groups are struggling far more than others.
46% of mortgagees spend more than 30% of their income on mortgage repayments; above 30% is generally used as a definition of housing stress. Owning is still better than renting, however, with 72% of renters in housing stress.
Not all households are struggling, with 35% of respondents saying their financial system had improved, driven by the labour market. A further 35% reported no change.
Regulation this year
Regulators have made living expenses a top priority for 2018 and ME’s report suggests their interest may be justified.
Banks have increased the level of detail required from borrowers on living expenses, with a new ANZ interview guide requiring brokers to ask questions about a customer’s Netflix subscription.
The regulators' particular focus on property investors may be misplaced, however. ME’s report showed that property investors had a significantly higher level of financial comfort (6.61) than owner-occupiers (5.2), which ME attributed to most investors having higher incomes and wealth.
Brokers repeatedly told regulators that interest-only borrowers, who were heavily targeted by regulation in 2017, often had higher incomes than principal and interest counterparts.
Frustrated by slow turnarounds, bad service or poor rates? Here’s YOUR chance to do something about it.
MPA’s Brokers on Banks survey is looking for your feedback now. In less than five minutes you can provide the data we need to hold the banks to account and drive real change in the industry.
Click here for the survey. Please do it now, as the survey closes at the end of this week.
Meeting living expenses is becoming an increasing struggle for Australians, potentially comprising their ability to meet repayments.
30% of households reported their financial situation worsening, according to ME bank’s Household Financial Comfort Report, with living expenses the main culprit.
Over the past year, 16% of households were ‘not always able to pay their utility bills on time’, while 19% ‘sought financial help from family or friends’ and 13% ‘pawned or sold something to buy necessities’ – a clear illustration of bill stress, ME claims.
“Mortgage defaults may escalate if interest rates increase”, the report warns, “particularly among vulnerable low-income households already dealing with the rising cost of necessities.”
Just under a third of those surveyed by ME said they ‘can just manage to make minimum payments on my debt’ whilst 7% said they could not meet repayments. Both numbers were marginally lower than in December.
Not all bad news
Living expenses matter, say ME, because they have brought down what might otherwise be an improving situation. ME surveyed 1500 Australians for their report, revealing that some groups are struggling far more than others.
46% of mortgagees spend more than 30% of their income on mortgage repayments; above 30% is generally used as a definition of housing stress. Owning is still better than renting, however, with 72% of renters in housing stress.
Not all households are struggling, with 35% of respondents saying their financial system had improved, driven by the labour market. A further 35% reported no change.
Regulation this year
Regulators have made living expenses a top priority for 2018 and ME’s report suggests their interest may be justified.
Banks have increased the level of detail required from borrowers on living expenses, with a new ANZ interview guide requiring brokers to ask questions about a customer’s Netflix subscription.
The regulators' particular focus on property investors may be misplaced, however. ME’s report showed that property investors had a significantly higher level of financial comfort (6.61) than owner-occupiers (5.2), which ME attributed to most investors having higher incomes and wealth.
Brokers repeatedly told regulators that interest-only borrowers, who were heavily targeted by regulation in 2017, often had higher incomes than principal and interest counterparts.
Frustrated by slow turnarounds, bad service or poor rates? Here’s YOUR chance to do something about it.MPA’s Brokers on Banks survey is looking for your feedback now. In less than five minutes you can provide the data we need to hold the banks to account and drive real change in the industry.
Click here for the survey. Please do it now, as the survey closes at the end of this week.
