Financial stress causing $31 billion in lost productivity

author-avatar By 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
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
WIN YOUR HOME LOAN INTEREST FREE

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • WIN your home loan interest free and save up to $1.1 million. Refinance by 29 October. T&Cs apply.
  • Refinance Only. Fast online application, refinance in minutes, not weeks.
  • No Nano fees, Free 100% offset sub account. Mobile app. Visa debit card & instant payments.
WIN YOUR HOME LOAN INTEREST FREE

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • WIN your home loan interest free and save up to $1.1 million. Refinance by 29 October. T&Cs apply.
  • Refinance Only. Fast online application, refinance in minutes, not weeks.
  • No Nano fees, Free 100% offset sub account. Mobile app. Visa debit card & instant payments.
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

Rates correct as of September 27, 2021. 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 which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

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.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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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 is passionate about breaking down complex financial topics for the everyday consumer.

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