(Australian Associated Press)
New research says Australians are becoming increasingly comfortable living with debt, although there’s a big difference between those in metropolitan and regional areas.
Low interest rates and rising house values in Sydney and Melbourne have many Australians feeling better about their mortgage and credit repayments, with a ME Bank survey recording its highest reading of debt comfort levels.
As part of its Household Financial Comfort Index poll of 1500 households, debt comfort levels for the six months to December rose five per cent to 6.55 out of 10.
The figures were buoyed by increased comfort with debt in metro areas, with the measure climbing seven per cent during the second half of 2019.
ME Bank economist Jeff Oughton said many homeowners were taking advantage of low interest rates to reduce mortgage debt, and were using savings from tax cuts to do the same.
“Those people paying off a mortgage are the ones saying they’re better off,” he said.
“People have used much lower interest rates to pay down debt, and that’s improved their comfort with debt.”
However, the debt comfort does not extend to those outside metro areas.
The figure for regional Australians’ dropped one per cent.
Similarly, the overall financial comfort of Australians fell four per cent for the period as overall comfort in metro areas gained three per cent.
The impact of the drought and bushfires had nullified any advantage of lower interest rates for people living in the regions, according to Mr Oughton.
“The financial comfort of people in regional areas has taken a significant hit in the last six months,” he said.
The property markets in states with smaller populations, such as South Australia and Western Australia, were also yet to experience the growth of those on the east coast, Mr Oughton said.
ME bank said overall national household financial comfort rose slightly for the second half of 2019, improving by 2.0 per cent to 5.59 out of 10.