According to the Reserve Bank of Australia (RBA), Aussie’s personal loans have generally been upward since 1994. It blew up to 163.7 billion in March 2020 from January 1994’s 40.8 billion.
Although the statistics show the continuous uptrend even without the pandemic, it is undeniable that pandemic also becomes a factor that affects it. Thirty-two per cent of the Northern Territory citizens expressed their interest in asking for more personal loans in the next six months.
The continuous request for a loan is not surprising because of the pandemic’s fear and crisis. Because of this, Australian banks provided six months grace period to defer payments of loans. Aussies believed that it was a necessary action because of the pandemic’s drastic effect on their livelihood.
Although there was no official statement, Josh Frydenberg revealed the country’s recession. As of June, the jobless rate increased to 7.1 per cent, and many economists predicted that it would turn 7.7 in upcoming months.
According to the Australian Bureau of Statistics, this intense recession happened only after 29 years, starting last June. The bureau stated that the GDP fell by seven per cent because of the pandemic.
Because of the coronavirus’s troubles and fear, many Aussies felt that they needed to save more and spent less, which caused it to increase to six. Frydenberg stated that because of the lack of spending, it could hurt the country’s economy because of the lack of patronage.
Months have passed, and the grace period provided by the banks has ended. Banks started making calls to catch up with the customers about their loans and asked for repayment. Although there are still struggling people to repay their loans, many Aussies also express their spending confidence.
Because of the stimulatory savings that many Aussies have acquired during the pandemic, many express their confidence in spending. The Aussies become positive about the country’s economy despite the uncertainties brought by the pandemic. It is a surprising situation since many Aussies, around 932,000, lost their jobs in six months.
Major banks, ANZ, Westpac, and Commonwealth Bank, confirm it. Also, according to the Westpac-Melbourne Institute Index of Consumer Sentiment, it is an 11.9 per cent increase. This result was from the telephone survey it conducted to around 1200 people.
Because of this, the government budget will also increase. The forecast is around 213.7 billion.
According to Bill Evans, chief economist, it showed a 32 per cent increase in the index after two months.
The results mirrored the consumer confidence data from the ANZ-Roy Morgan that showed a rebound of 49.6 per cent.
Economists say that this confidence is due to several factors that include the country’s containment of the virus, the RBA’s financial relief that includes the deferment of paying loans, and the drafted federal budget.
Many Aussies also express their interest in buying a new property because of their confidence in their finances, economy, and employment security. Many of them want to buy a house because they believe that the current situation provides them with the best opportunity.
More than half of Aussies, around 59 per cent, believe that now is the right time to buy a property, which is higher than the 42 per cent last April. The index increased by 10.6 per cent from September 2019.
The ones who belong to Generation Z are the most confident, comprising 55 per cent of those who expressed their interest. However, the older population is the more cautious one.
Even though that is the case, it does not deny that the many Aussies are confident financially, which they have proven by buying houses and properties, according to Evans.
Additionally, the interest rate also falls. The RBA dropped the cash rate to 0.25 per cent in March, which was the lowest in the past 30 years. There is also a prediction that it will go lower in November, reaching only 0.1 per cent.
This cut on the interest rate aims to help the central bank meet its inflation and employment goal.
Many economists believe that this Aussies’ confidence in their finance is only a proportionate response because of the low mortgage interest rate. Aside from that, many of them acquired some savings because of their stimulatory budget. Also, there is a continuous fall in property prices in the past five months.
People who express their confidence in buying a property came from Queensland, which is at 4.4 per cent, Victoria, 7 per cent, and New South Wales as the one on the lead.
The next year’s outlook increase by 24 per cent this month. Many citizens also express their confidence about Australia’s economy in the next five years, proven by the 14 per cent increase in the five-year forecast. According to Evans, it is the highest since August 2010.
Many respondents believe that the budget will help lift Australia’s economy.
The survey reveals that many Aussies feel better about their family finances. Around 6.2 per cent of them believe that they improved their financial situation today than last year. More of them, around 9.4 per cent, believe that their situation will be better in five years.
One of the major reasons for this confidence is the increase in job security, which increased by 14.2 per cent in October.
However, several Aussies feel that now is the best time to buy a property, many of them ask for loans.
According to the Australian Bureau of Statistics, in August alone, banks have approved 12,302 property loans reaching a value of 16.3 million. It is a tremendous 13.6 per cent increase in the past 18 years.