Saving for retirement comes third after holidays and a rainy day, according to the St. George-Melbourne Institute Household Financial Conditions report.
The report found Australian households are continuing to boost the piggy-bank and ‘save a lot’ with a rise of 1.9 percentage points to 8.2 per cent over this quarter. Four in ten households said they were able to maintain some form of saving.
According to the report, four out of ten households have no debt and more than half ware using 10 per cent of less of their income for repayments. Savings towards property was the only area that saw an increase, lifting 1.6 percentage points.
St. George’s head of retail banking for outer metro and regional NSW, Neelam Tandon, said not only are households reducing their credit card debt, but mortgage debt has fallen by 3.3 percentage points over the same period.
“We’re now seeing household revert back to a cautious approach, with less people drawing on their savings and more people using the low interest rates to pay off their debt quickly,” Tandon said.
However, the bank’s chief economist, Hans Kunnen, said despite the rise in households saving towards a house deposit, the factor as a motivation has declined over the past 12 months.
He said it indicates that potential purchasers have become discouraged in some markets.
Saving for holidays remained as the number one motivation for 59 per cent of respondents, followed by saving for a rainy day (57.4 per cent), retirement (46.8 per cent), saving to pay debt (43.6 per cent), and renovations (37.1 per cent).
