Freedomroo – The surprising number of Australians who would struggle if they lost their job

A large number of Australians would struggle financially if they lost their job despite interest rates being at a record low. Pictured is a Centrelink queue on the Gold Coast in March 2020

A large number of Australians would struggle financially if they lost their job despite interest rates being at a record low.

House rents in every capital city, except Melbourne, have risen during the past year while the banks are starting to increase their fixed mortgage rates, sparking fears of loan stress from 2023.

With living costs rising again, 42 per cent of Australians are living pay cheque to pay cheque, an online Finder survey of 14,544 consumers found.

That equated to 7million Australian adults who were struggling financially. 

Alarmingly, little more than a third – or 36 per cent – could live off their savings for four months if they suddenly lost their job. 

A large number of Australians would struggle financially if they lost their job despite interest rates being at a record low. Pictured is a Centrelink queue on the Gold Coast in March 2020

How long Australians could last without work

Less than a week: 11 per cent

One week: 6 per cent

Two weeks: 8 per cent

Three weeks: 4 per cent

One month: 13 per cent

Two months: 9 per cent

Three months: 13 per cent

Four to six months: 12 per cent

Six to 12 months: 8 per cent

More than a year:  16 per cent

Source: Finder online survey of 14,544 Australians taken in April 2021

One in ten, or 11 per cent, would only be able to last a week on the money in their bank.

Only 16 per cent would be able to last a year living on their savings without a job. 

Finder’s personal finance specialist Taylor Blackburn said Australians needed to save more in preparation for an uncertain labour market.  

‘Millions of Aussie households are living hand to mouth,’ he told Daily Mail Australia.

‘Although you may be able to keep your head above water, any unforeseen expenses could pull the rug out from under you.

‘No matter how stable your job, you should always try and prepare for the worst.’

In a sign of worry, Australians are in fact saving more with overall bank deposits rising by 12.43 per cent in the year to March 2021 to $124.1billion, Australian Prudential Regulation Authority data showed.

RateCity.com.au research director Sally Tindall said the banking regulator figures demonstrated the Covid pandemic had encouraged Australians to actively save.

‘Covid has been a financial wake-up call for many Australians,’ she said.

‘Since the pandemic hit, many families have put their personal finances first, getting themselves into a stronger position so they can tackle future challenges.’

House rents in every capital city, except Melbourne, have risen during the past year. Domain data showing national house rents had increased by 4 per cent in the year to March to $471 a week. Pictured are units at Cronulla in Sydney's Sutherland Shire

House rents in every capital city, except Melbourne, have risen during the past year. Domain data showing national house rents had increased by 4 per cent in the year to March to $471 a week. Pictured are units at Cronulla in Sydney’s Sutherland Shire

Borrowers are being urged to brace for higher repayments even though three of Australia’s big four are offering fixed home loan rates of less than 2 per cent, with ANZ the exception.

Nonetheless, Westpac late last month announced it would increase by 0.3 percentage points its four and five-year fixed rate for owner-occupier borrowers paying off principal and interest. 

This will take introductory rates to 2.19 per cent and 2.49 per cent, respectively.

Westpac, Australia’s second biggest bank, revealed on Monday that 32 per cent of borrowers in the six months to March 2021 had taken out a fixed mortgage, up from 23 per cent during the corresponding period in late 2019 and early 2020 before the pandemic. 

Canstar group executive of finance services, Steve Mickenbecker said borrowers were likely to encounter difficulties in two years’ time as ultra-low fixed mortgage rates expired.

‘Today’s fixed rate borrowers should be expecting a large increase in their repayments in 2023 and 2024 as they face the double impact of coming off today’s super low three-year fixed rates and a likely resumption of an up cycle in home loan interest rates,’ he told Daily Mail Australia.

Borrowers are being urged to brace for higher repayments even though three of Australia's big four are offering fixed home loan rates of less than 2 per cent, with ANZ the exception. Pictured is a stock image

Borrowers are being urged to brace for higher repayments even though three of Australia’s big four are offering fixed home loan rates of less than 2 per cent, with ANZ the exception. Pictured is a stock image

Australian fixed rate loans at a glance

WESTPAC: One year, 1.99 per cent; two years, 1.79 per cent; three years, 1.88 per cent; four years, 2.19 per cent; five years, 2.49 per cent

COMMONWEALTH: One year, 2.09 per cent; two years, 1.94 per cent; three years, 2.14 per cent; four years, 2.19 per cent; five years, 2.99 per cent

NAB: One year, 2.09 per cent; two years, 1.89 per cent; three years, 1.98 per cent; four years, 1.98 per cent; five years, 2.24 per cent

ANZ: One year, 2.04 per cent; two years, 2.04 per cent; three years, 2.04 per cent; four years, 2.24 per cent; five years

Source: Canstar, April 2021 

‘There is potential for a blow out in the level of mortgage stress in the community.’

A RateCity.com.au analysis of mortgages showed only six fixed rate loans now offered rates of less than 2 per cent with four-year terms, down from 32 at the start of 2021. 

Lenders are no longer offering five-year fixed rates under 2 per cent.

While the Reserve Bank of Australia has vowed to keep the cash rate on hold at a record low of 0.1 per cent, Ms Tindall said borrowers needed to brace for higher fixed rates.

‘The RBA isn’t intending to hike the cash rate until at least 2024, but many home loan rates will rise earlier, particularly fixed ones,’ she said. 

‘Banks are already hiking their four- and five-year rates, while three-year rates are likely to be the next cab off the rank. 

‘We expect some of them could start moving north in the second half of this year.’

Renters aren’t universally having an easier time either with Domain data showing national house rents had increased by 4 per cent in the year to March to $471 a week. 

Darwin house rents surged by a whopping 14.6 per cent to $550 – the same price as Sydney.

Perth house rents soared by 14.7 per cent to $430 – equal to Melbourne.

Melbourne was the only city where renting a house became cheaper, with leasing costs falling by 2.3 per cent during the past year. 

While rents and mortgage rates are going up, at least the labour market is strong with the ANZ job ad series showing a 4.7 per cent increase in April to a 12-year high of 196,612 available positions. Pictured is a Woolworths supermarket at Rosehill in Sydney's west

While rents and mortgage rates are going up, at least the labour market is strong with the ANZ job ad series showing a 4.7 per cent increase in April to a 12-year high of 196,612 available positions. Pictured is a Woolworths supermarket at Rosehill in Sydney’s west

While rents and mortgage rates are going up, at least the labour market is strong with the ANZ job ad series showing a 4.7 per cent increase in April to a 12-year high of 196,612 available positions. 

Internet job ads have increased for 11 straight months to be up 198.8 per cent from a year ago.

For those who are unemployed, the fortnightly base rate of JobSeeker was permanently increased to $620.80 on April Fool’s Day, without the $150 coronavirus supplement.

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