By: Kate Miller
Almost one in two Australian mortgage holders is ahead on mortgage payments a new report by ING DIRECT has found.
According to ING DIRECT’s second quarter Financial Wellbeing Index, released yesterday for the first time, 48 per cent of mortgage holders are making extra repayments on their home loans, up from 46 per cent in the first quarter, despite higher interest rates.
The new Index, which measures households’ financial wellbeing on six different financial fronts, also found Australians are very comfortable with their long term debt commitments – more so than with any other aspect of their finances.
Average comfort levels for long term debt commitments (mortgages and personal loans) were 6.5 out of a possible 7, compared to short term debt (credit cards) at 5.8.
In contrast, when it comes to households’ long term assets and ability to meet bills, comfort sits at just 3.9 and 4 per cent respectively.
Overall, the Index found Australians’ financial wellbeing stood at 113, with a score above 100 indicating positive financial wellbeing. This compared to 108 in the first quarter of the year.
ING DIRECT CEO Don Koch said the Index gives extraordinary new insights into the financial welfare of Australian households.
“What we’re seeing at present is a big effort by households to scale back personal debt.”
“Whether it’s fallout from the global financial crisis or lessons learned from the Greek debt crisis, many Australians have reduced their home loan and credit card balances over the last quarter. The effort is all the more significant as this period included two rises in the official cash rate.”