Is your household budget feeling the pinch?
You’re not alone.
New data shows the average South Australian household is currently in debt to the tune of more than $215,000.
Data Finance Analytics (DFA) – which compiles its data through continuous, rolling household surveys that monitor financial, property, and economic trends to gather information on mortgage, rental and investor stress – has revealed the financial strain faced in the community.
According to the data, the average South Australian owner occupied household’s mortgage is $134,053, with the average amount tied up in an investment property being $58,738.
South Aussies also have, on average $5659 tied up in outstanding card balances, Payday and Buy Now Pay Later owings.
On average, a further $17506 is outstanding on car, boat, improvements and personal spending loans, bringing the average total debt up to $215,956.
Digital Finance Analytics’ Martin North. Pic: Hollie Adams/The Australian
DFA founding principal and data scientist Martin North said the total mortgage debt appeared low because the data captured a mix of typically low-value first time borrowers, and long-time mortgage holders who had paid off a large portion of their debt.
“Add to this, some are making more than the minimum repayments to pay down debt quicker – which saves significant interest charges they would otherwise pay,” he said.
“That said, there is a proportion of households who are highly leveraged and who are under financial pressures.
“Averages mask the true effects.
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“Note too that there is a concentration of the other debts in stressed households, when they have cash flow pressures, they turn to credit cards or other credit, often at high interest rates.
“This is why I focus more on households’ cash flow than loan balances.”
He said the majority of households would not be significantly impacted by a small rate rise – provided they kept their job.
“There is a segment of the population who are already cashflow negative, and for them, small rate rises will be disastrous and potentially a tipping point.”
Mr North said first-time buying households who had stretched themselves to buy would be hardest hit by a rate rise.
“Many will make it sustainable by cutting back on other spending and just putting more of disposable income into debt servicing,” he said.
Finch Financial chief executive and mortgage expert Julian Finch
Finch Financial founder and CEO Julian Finch said buyers could save significantly by contacting their lender and asking for a better deal.
“Banks don’t call customers to say there’s a cheaper loan available,” he said.
“If you’re not checking, you’re probably overpaying.
He said households should review all expenses, not just their mortgage.
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“Insurance, phone plans and everyday bills often creep up without people noticing,” he said.
“Small savings across multiple areas can make a real difference.
“In a market like this, doing nothing is often the most expensive option.
“Borrowers who stay proactive are always in the strongest position.”
– with Aidan Devine
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