Financial conditions for Australian homeowners are on the rise as low interest rates and rising house prices have boosted their wealth position.
The quarterly St.George-Melbourne Institute Household Financial Conditions Report saw the overall household financial conditions index rise by 2.6% from September to December. This is the highest reading in one year. Meanwhile, financial conditions for those who wholly own their own home jumped 15.4% from September to December. This is the biggest improvement in financial conditions for
Aussie homeowners in two decades.
Andy Fell, St.George Retail Banking general manager, said the findings suggest that the upswing in the housing market and the low interest rates have helped improve the quality of life and financial situation for all Australian homeowners – mortgage free or not.
“The rising house prices and low interest rates we’ve seen over the past years have boosted household conditions for mortgage free homeowners and put them in a better financial position,” he said.
“This is an encouraging sign for Australians with home loans to take advantage of the current market and save more to down pay their mortgage so they can be a step closer to owning their dream home.”
In addition, the continued trend of adding to household savings is going strong with nearly one in two Australians (46.8%) adding to their piggy bank in December. This has increased by 3.7 percentage points compared to last quarter and is the highest proportion in one year.
However, St.George’s chief economist Besa Deda said consumer confidence remains fragile and is reflected in the proportion of households in 2014 that intend to decrease their debt levels.
“The number of respondents who said they would pay down debt with new savings rose by 3.9 percentage points to 17.6% of all households in December. This is the highest proportion in almost two years and the biggest quarterly percentage rise in three years,” she said.
