Financial stress causing $31 billion in lost productivity

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on November 12, 2020
Financial stress causing $31 billion in lost productivity

Photo by Luis Villasmil on Unsplash

AMP's 'Financial Wellness' research found 1.8 million Australians are experiencing financial stress, causing employee distraction and absenteeism.

The findings are based on a survey of more than 2,100 Australians, conducted between June and July, and extrapolated using wider Australian Bureau of Statistics (ABS) data.

The survey also found about half of the workforce experienced at least some level of stress about their finances, with those 'severely' or 'moderately' stressed 'ineffective' at work for 7.7 hours per week.

Sick days among the financially stressed also mounted, averaging out to an additional 1.2 hours every work week.

One in five females reported financial stress, as opposed to just over one in ten males.

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Lender

Variable
More details
  • Min 30% deposit
  • No monthly or ongoing fees, add 0.10% for offset
  • Unlimited redraws

Variable Home Loan (LVR < 70%)

  • Min 30% deposit
  • No monthly or ongoing fees, add 0.10% for offset
  • Unlimited redraws
Variable
More details
REFINANCE ONLY
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
REFINANCE ONLY

Variable Rate Home Loan – Refinance Only

  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Variable
More details
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
NO ONGOING FEES
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
NO ONGOING FEES

Yard PAYG Home Loan (Principal and Interest) LVR ≤ 80%

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of August 15, 2022. View disclaimer.

The stress might also peak over the coming months - Standard and Poor's (S&P) said in a report that any present mortgage hardship data does not "reflect genuine debt-serviceability pressures".

"We expect these trends to surface later this year and, more meaningfully, in the first quarter of 2021," the report said.

This coincides with the second wave of mortgage deferrals expiring, after many lenders offered deferrals until March 2021, and is despite renewed positive sentiment in the housing market, with Australians' average debt twice that of their income - led largely by housing - according to the ABS.

Australia's household debt-to-GDP ratio is also about 120%, second in the world only to Switzerland.

AMP's director of workplace super Ilaine Anderson said the stress goes beyond COVID-19 impacts.

"The research – conducted since 2014 – shows that financial stress remains a systemic issue in Australian society," she said.

“This is spilling into work with stressed employees worried and distracted, and not performing at the levels they’re capable of, or they don’t turn up at all. The combined effect is costing Australian businesses billions each year."

AMP's research also comes after CommBank teamed up with the University of NSW's 'Gendered Violence Research Network' to determine key areas for financial institutions to provide support to those undergoing economic and financial abuse.

"Financial abuse is a hidden epidemic affecting thousands of Australians who are experiencing domestic and family violence," CommBank group executive Sian Lewis said.

"Yet, there is limited academic evidence on the issue making it difficult to develop and deliver effective support for people impacted."

Such support measures identified include tailored financial products for victims, increased training for domestic violence support teams, and identifying how financial products can be misused by abusers and perpetrators.

If you or someone you know is experiencing domestic or family violence, call 1800RESPECT (1800 737 732) or visit www.1800RESPECT.org.au.

For counselling, advice and support call Men’s Referral Service on 1300 766 491 or ntv.org.au/get-help.

In an emergency or if you’re not feeling safe, always call 000.

Non-banks lenders still outperforming major and regional banks

S&P data shows non-bank lenders' COVID arrangements amounted to just 3.5% of the prime loan book in September.

This is ahead of the majors at 5.2% and regionals at 7.2%.

Other banks' arrangements also amounted to 5.5% of the loan books.

A tick over 4% of all low-doc home loans were in arrears by 90 days or more.

These figures are down sharply on May and June's results, however.

For example, 10.9% of regional banks' prime loans were deferred in June.

This data is "reflecting the gradual reopening of the economy in most parts of the country," according to Westpac's credit strategy team.




Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison strives to deliver and edit news and guides that are engaging, thought-provoking, and simple to read.

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