Four out of five Aussie borrowers are ready for whatever RBA throws at them, packing interest rate war chests the size of which would shock many, a new survey found.
It found that about 80 per cent of Aussie borrowers have a war chest worth as much as $100,000 plus, saying they’ll be good for a while as RBA moves into aggressive hikes.
The Reserve Bank of Australian increased its official cash rate target to 0.35 per cent Tuesday, shocking many experts who predicted it would only go to 0.2 per cent.
The survey commissioned by Money.com.au found widespread mortgage defaults were “not likely” to be on the horizon given how prepared Australians were with buffers.
It found around 14 per cent had over $100,000 sitting in a mortgage offset account, redraw facility or savings account, one in four (28 per cent) had more than $50,000, and 41 per cent had more than $20,000.
Half of Victorians (51 per cent) surveyed said they had a savings account buffer of more than $20,000, which was the same with 31 per cent of Queenslanders and 25 per cent of South Australians.
Asked how much they had in their mortgage offset account, home loan redraw facility, or in a savings account, 40 per cent of those aged 50 to 54 said nil, 15 per cent said less than $5,000, 11 per cent said more than $200,000. and 10 per cent said $10,000 to $20,000.
The biggest proportion of those aged 18-29 (19 per cent) said they had $20,000 to $50,000 in their buffer, while the highest proportion of people aged 45 to 49 said they had nil.
Money.com.au spokesperson Helen Baker, who is a licensed financial adviser, said banks will have already priced in the RBA cash rate increases into fixed loan rates, but could continue to make changes.
“The research suggests a strong proportion of Australians are financially savvy and may have already been proactively preparing for expected increases in interest rates and the cost of living during the life of their home loan, as well as future changes in their personal circumstances that would impact their income, such as starting a family. Many may have known that the era of cheap money would eventually come to an end,” she said.
Ms Baker suggested making educated and informed forecasts on rate rises.
“Right now, interest rates on variable loans are at least 1 cent lower than fixed-loan rates. Do you stay with a lower variable rate or lock in a higher fixed rate, believing that both types will be much higher in the next year?”
The survey involved an independent panel of 1,018 Australian mortgage holders.