A record number of Australians are reporting debt trouble, financial worry and strain, and an inability to make minimum repayments on debts and loans, according to ME Bank research.
The Household Financial Comfort Report showed that 65 per cent of Australian households had outstanding debt, with the Household Financial Comfort Index dropping by four per cent to a national average of 5.37 out of 10 in the first half of 2016. Perceived comfort was measured on income, cash savings and net wealth, with baby boomers down seven per cent to record the highest level of concern among age groups.
Around 90 per cent of Australian households reported low-to-mid financial comfort, with only 10 per cent reporting high comfort — the fourth lowest omfort levels since ME Bank began conducting the survey nearly five years ago.
South Australia was found to be the most financially comfortable mainland state in Australia, rising two per cent, while all other mainland states recorded a fall. Financial comfort in Western Australia fell two per cent to a record low of 5.02 out of 10, while Victoria, which experienced a six per cent drop, remained Australia's most financially comfortable city — reporting a comfort level of 5.80 out of 10. Sydney sits slightly behind at this with a recorded 5.58 out of 10.
ME consulting economist, Jeff Oughton, said that Aussies were feeling vulnerable and were feeling the shocks associated with a lack of suitable jobs and working availability, as well as wage cuts and mortgage debt stress.
"With a lack of cash savings or equity buffer... the findings clearly indicate heightened concerns around the adequacy of income, the cost of necessities, lack of job availability and security as well as deterioration in expectations about meeting minimum debt payments and maintaining a standard of living in retirement," he said.
"There's a marked increase in households expecting to be unable to service their debts, despite record low borrowing costs."