Drowning in Cash? Do you have more cash stashed than before Covid?

How has the pandemic induced recession affected you?

Clearly many people and many businesses have, and still are, suffering.

Cash Money

But at the same time more Australians have stashed more of their cash in the banks.

They have rapidly amassed close to $100billion in total savings as a buffer against the COVID-19 recession.

Household deposits with financial institutions it up almost 12% over the year.

In September alone $16.5billion flowed into bank deposit accounts and since the pandemic household deposits are up a cumulative $99.5bn (or 10.1% on Feb 2020 levels ).

Sure interest rates may be at record lows, and tipped to go lower, but it seems that Aussies don’t want to borrow unless it’s to buy a home.

Household Cash

The rise in the last month was partly driven by tax refunds, but notwithstanding households deposits are up $115.2billion on the same period last year.

Driving the increase in savings has been increased government payments, superannuation withdrawals worth some $34.5billion to date, and repayment deferrals, which have offset the hit to household incomes in aggregate.

That puts us in a great position as we move forward

The key implication here is that if unemployment continues to rise as government support is tapered, the household sector has a fair degree of liquidity that could then underpin consumption even as that support is tapered.

Savings At Banks

NAB reports that credit growth (new loans) is rising –  up 0.1% this month as owner-occupier housing credit starts lifting (housing +0.4% m/m with owner-occupier +0.5% m/m)

But investor lending is subdued (+0.1% m/m), as is business credit (-0.3% m/m and its fifth consecutive month of decline.)

 

Credit Growth

Mortgage Stress at near record low

​​Roy Morgan research shows an estimated 751,000 mortgage holders (20.2%) were at risk of ‘mortgage stress’ in the three months to August 2020.
This is near the record lows of a year ago, when only 723,000 mortgage holders were considered ‘At Risk’ in the three months to October 2019.
However, the figure has been driven down by Federal Government financial support for employees and businesses, and by major help provided by banks to borrowers in response to the pandemic, including mortgage pauses.
Both these elements have significantly tapered off and will continue to do so before finishing completely.

 

Mortgage Stress

Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on

Metropole

A perfect storm is brewing for our property markets in 2021-22, and you can trust the team at Metropole to provide you with directionguidance and results.

In challenging times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that’s what you exactly what you get from the multi award winning team at Metropole.

If you’re looking at buying your next home or investment property here’s 4 ways we can help you:

  1. Strategic property advice. – Allow us to build a Strategic Property Plan for you and your family.  Planning is bringing the future into the present so you can do something about it now!  This will give you direction, results and more certainty. Click here to learn more
  2. Buyer’s agency – As Australia’s most trusted buyers’ agents we’ve been involved in over $3Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney and Brisbane bring you years of experience and perspective – that’s something money just can’t buy. We’ll help you find your next home or an investment grade property.  Click here to learn how we can help you.
  3. Wealth Advisory – We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
  4. Property Management – Our stress free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years and our properties lease 10 days faster than the market average.
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Kate Forbes

About

Kate Forbes is a National Director Property Strategy at Metropole. She has 15 years of investment experience in financial markets in two continents, is qualified in multiple disciplines and is also a chartered financial analyst (CFA).
Visit Metropole Melbourne


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