Australians are feeling less anxious about their financial situations, but this could change when support from the government and financial institutions are stopped, according to new NAB research.
Concerns about personal finances eased across all key demographic groups, with NAB’s Household Financial Anxiety Index falling by nearly four points to 57.7 points in the three months to June 2020. It was the first fall after three consecutive quarters of increasing financial anxiety.
While NAB described the latest index as “below average”, it was still slightly higher than the 56.3 points seen in the same quarter last year.
About a third of Australians say they suffered financially in the three months to June 2020, down from 40 per cent in the previous quarter. It was the lowest proportion of households in financial hardship in the past three years, despite pressures from the pandemic, soaring unemployment and the wider economic downturn.
But the impacts of these challenges have been cushioned significantly for many by government stimulus measures, including JobKeeper and JobSeeker, mortgage repayment deferrals and the early release of superannuation.
NAB’s head of behavioural and industry economics Dean Pearson said the story on financial wellbeing may change once these support initiatives end.
JobKeeper and JobSeeker in its current form is due to end in late September. And mortgage-holders who continue to face financial strife may apply to defer their repayments for a further four months after the September deadline.
Debt a concern for many
While debt was found to be “manageable” for 70 per cent of Australians who have an outstanding loan, debt was still worrying for many borrowers.
Almost a quarter of those who have a loan said they were holding a “bit more debt than manageable”. Five per cent indicated that they had “far more debt than manageable”. But this number increased to nine per cent for both low-income earners and for people who were unemployed.
Unsurprisingly, people with payday loans had the highest level of concern for their debts, rating it 59 points out of a possible 100. A payday loan is a short-term loan for up to $2,000, but often with exorbitant interest rates and fees.
About 6 per cent of Australians have an outstanding payday loan. Young adults were more likely to hold this type of loan, with 23 per cent of those aged 18 to 29 holding a payday loan.
However, payday lending fell in the June quarter. One in 10 of those who faced financial hardship in this period opted to take out a payday loan, down from 18 per cent in the previous quarter.
The most common form of debt Australians used for financial relief in the surveyed period was credit cards, with a third of Australians turning to their plastic in times of financial need.
More than 30 per cent of households resorted to family and friend loans, and 13 per cent used a bank loan.
Credit cards were the most commonly held debt, with 45 per cent of Australians having an outstanding credit card balance. But that didn’t translate to strong concerns for credit card debts, which was rated an index of 44.8 points.