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Household financial wellbeing at highest level since 2010

Published on 17/10/2012

Comfort with savings, income and ability to pay bills rises significantly.

Wednesday, 17 October 2012: The ING DIRECT Financial Wellbeing Index shows Australians are more confident in their household finances today than at any other time since Q2 2010.  Comfort with household savings – a consistent weak spot in household finances, has risen to its highest level since Q1 2010.

Key findings for Q3 2012 (surveyed in September and October2012):

  • Households are more comfortable with their mortgage than any other aspect of personal finances. Almost one in two (47%) of those households with a mortgage are ahead with their loan.
  • Comfort with credit card debt has improved as households continue to pay down balances. Median outstanding card debt has dropped to $1,470 per household – the lowest since tracking began in Q1 2010.
  • Comfort with household income is the highest since Q2 2010.
  • Median savings across the country  is $9,735
  • 6% of households say income is insufficient to pay immediate bills – rising to 10% of low income households (less than $40,000pa).

Household confidence has risen across five out of six key financial indicators

The quarterly Financial Wellbeing Index rates household comfort levels across six key aspects of personal financial wellbeing including credit card and mortgage debt, savings, investments, household income and ability to pay bills.

The ING DIRECT Financial Wellbeing Index rose to 109.0 in Q3 2012, up from 105.6 in Q2 2012, and on par with the highest ever Index score recorded in Q2 20120.

Household confidence has increased across all measures from Q2 apart from long term investments.

Australian households are continuing to adopt cautious money management with a focus on reducing household debt. As a result almost nine out of ten (88%) are comfortable with credit card debt, and 93% are comfortable with their home loan.

Confidence is on the rise with 83% of households saying they are comfortable with income levels – up from 78% in Q2 2012. Six percent of households say  their income is not enough to meet immediate bills and debts, down from 10% in Q2.

For the first time since tracking began confidence in personal savings is not the lowest score across the six financial dimensions. It is now marginally higher than comfort with long term investments, which has taken over as the weak spot of household financial wellbeing. Overall, 55% of all households have no assets or investments outside of the family home – up from 47% in Q2.

Mr Vaughn Richtor, CEO of ING DIRECT, says, “Households are saving more and reducing debt which is leading to greater confidence.”

“It is a good sign that confidence is on the way up with financial wellbeing reaching a 2-year high.”

Media contact:
Caroline Thomas
Ph: 02 9018 5160
M: 0413 317 225
caroline.thomas@ingdirect.com.au

Research methodology

The ING DIRECT Financial Wellbeing Index was complied by Galaxy Research from the online responses of 1,024 households between 26 September and 3 October 2012 (Q3). The data was weighted by region and household size to reflect the Australian household population based on the 2006 census. The level of savings reported in the study is also calibrated to APRA national bank total deposits (households) to ensure accuracy of household savings levels.

About ING DIRECT

ING DIRECT began operating in Australia in 1999. By doing business online, over the phone and through intermediaries, ING DIRECT keeps it overheads low and passes the savings onto customers in the form of competitive rates. Today, it has grown to become Australia’s fifth largest retail bank, with $26 billion in deposits, more than $38 billion in loans and around 1.4 million customers.

Please note ING DIRECT is never abbreviated to ING.

 

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