Australian shoppers adopt new strategy for Boxing Day sales
The thrill of bargain shopping is no longer the strongest draw for the post Christmas sales period
2 min
Cost of living pressures are expected to impact Boxing Day sales with more Australians planning to spend less, new consumer research shows.
The survey conducted on behalf of the Commonwealth Bank showed almost one in two people, or 49 percent of Australians, expect to spend during the annual post Christmas sale period, up from 42 percent last year and 40 percent in 2021. However, the average planned spend this year is expected to be $475.70, or $4.6bn nationally, down from $483.20 in 2022 and $557.05 in 2021.
People under the age of 39 are most likely to spend over this period as they use the sales to buy necessities, CBA chief economist Stephen Hlamarick said.
“The increase we’ve seen in spending at discount and variety stores in November is partly explained by Christmas and holiday shopping with discretionary spend up 1.9 percent,” he said. “However, people are also using the sales to stock up on essentials – with essential spending edging up 0.3 per cent.
“Essential spending usually falls after the “gift giving” period. However, given consumers are clearly seeking sales bargains for both essential and discretionary items, Boxing Day sales could also see a similar trend with a larger share of essential spending.”
CBA personal finance expert Jess Irvine said it was important for shoppers to have a plan before heading out.
“For anyone planning to use Boxing Day as an opportunity to bag a bargain, it is important to have a clear plan in advance of which items you plan to purchase. Write a list and stick to it to limit impulse purchases” said Ms Irvine.
“A good rule of thumb is that if the first time it occurs to you to purchase something is during a sale period, you probably don’t need it.
“If you are stocking up, make sure to do your research and check first for any cashback offers that may be available for that retailer.
She also warned to be wary of suspicious text messages or online scams.
“Stay scam aware when shopping, as scammers are known to be more active during sales periods,” Ms Irvine said. “Always remember to remain cautious, especially at this busy time of year, and stop, check and reject any suspicious websites or text messages.”
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If you’re looking to secure a home loan, you might want to consider these expert tips…
5 min
No matter whether you’re a first home buyer or a seasoned investor, entering the property market right now, in whatever capacity, is a tricky task thanks to high interest rates and a super competitive market across the board.
With Google searches like ‘how much deposit do I need to buy a house’ and ‘how to get a home loan’ currently trending, there’s one question potential buyers should be asking, as well: ‘what are the things to stop doing before applying for a home loan’.
Barbara Giamalis, a mortgage broker at Tiimely Home, has over 25 years of experience on the matter, and says there are certainly some factors to consider when applying for a home loan that can better your chances of success.
“There’s no right or wrong time to purchase a home; it all depends on every person’s financial situation, but you must ensure you’re comfortable paying back the loan based on your personal financial circumstances,” said Ms Giamalis.
“The number one question I’m asked is, ‘how much can I borrow?’, but there’s a huge difference between what people can borrow now in comparison to rates. By enacting some of these small tips below, it might just be the difference between getting approved or denied for a home loan.”
Below, Ms Giamalis lists five things you should consider stopping if you’re planning to apply for a home loan. And with predications of lower interest rates coming into play this year, there’s never been a better time to get on top of the home loan race.
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1. Consider cancelling your credit card
This is a simple one. Typically, if you’re looking to borrow more money for a higher loan, it’s wise to close any credit card accounts you have open. Contrary to popular opinion, you definitely don’t need a credit card to build your credit score to get a home loan.
“If you’ve got credit cards, try and pay them off and cancel them before applying for a loan because it gives you greater borrowing power,” said Ms Giamalis.
“You don’t need a good credit score through a credit card to get approved for a home loan as your credit rating is what it is. If you’re a first-time borrower and never had a loan, your rating won’t be great, it might be around 700, but it’s better than having 800 with two credit cards.”
Typically, a credit card rating is calculated from your credit report, which is essentially a history of your credit card actions. It’s calculated based off your line of credit (the amount you have borrowed), your credit application history, and whether you have paid your debts in time. Your score will be highlighted between zero to 1,200; the higher the score, the better your odds are of getting a loan. The lower your score, riskier you present to potential lenders.
2. Stop using ‘Buy Now, Pay Later’ schemes
We’ve all been there. ‘Buy Now, Pay Later’ services present as extremely attractive payment alternatives when shopping online. But therein lies the danger; such services rely on its customers not making repayments in time.
And if you’re considering applying for a home loan, it’s wise to avoid using such services all together.
“If an applicant opts to pay off purchases in increments, even interest-free payments, this could signal to some lenders that the applicant may not be financially stable,” said Ms Giamalis.
“Most lenders will look at the living expenses of an applicant. If an applicant is using ‘buy now, pay later’ services more than what they have in their savings, this could be a red flag and lenders could question whether they can afford a loan.”
Services like Afterpay also have the right to report any missed payments on your credit history, which could definitely have a negative impact to your credit score.
3. Don’t put off saving for future mortgage repayments
Before applying for a home loan, a good indication of whether you would be able to afford the monthly repayments on your mortgage is demonstrating the ability to save the amount. This, along with saving for your ten or 20 percent deposit, will put you in good stead for your home loan preparation, and will show lenders that you’re disciplined when it comes to finances.
“One of the best tips for young people, and one they can start doing now, is to start saving for their monthly mortgage payment before applying for a home loan as it shows dedication,” said Ms Giamalis.
Ms Giamalis adds that having a three-month saving history is a great way to prove this to potential lenders.
Here are some friendly financial tools to assist you along the way.
4. Stop gambling and making cash withdrawals
According to Gambling Statistics Australia, 6.8 million Australians participate in some form of gambling each year. This could include activities like buying a ticket in the lottery right through to using gambling apps and visiting casinos. This can present as an obvious red flag to lenders, who will take this into account when deciding to service a home loan application or not.
Another factor to consider is cash withdrawals. If you’re someone who is making regular ATM cash withdrawals per week or per month, this can be a problem as the potential lender can’t track where this money is going. Experts suggest it’s better to have purchases that are traceable.
“Large one-off purchases such as a couch, a new hot water service or a motor vehicle, won’t be taken into an applicant’s living expenses as it’s a one-off meaning the banks will look at that as a discretionary cost,” added Ms Giamalis.
5. Don’t hold onto student debt
One of the key considerations your mortgage broker or financial professional will consider in the home loan application process is paying out any debts you may have outstanding, such as your higher education debt.
It might seem obvious that paying off a HECS debt will strengthen your chances of obtaining a home loan, however, Ms Giamalis says many people often don’t factor in these debts.
“The Higher Education Loan Program (HELP) impacts your borrowing power. HELP debt is a liability that you need to declare in the home loan application process,” said Ms Giamalis.
“The impact of HECS on your ability to get a home loan may vary depending on your income level and the amount of your HECS debt. Seeking financial advice before deciding to pay off your debt is crucial.”
Many are not in the position to pay off their student loans immediately, so this point comes as an additional should you be in the position to do so. This also applies even in light of the Federal Government’s proposal to wipe a reported $3 billion in debt from three million Australians who have HECS debts through indexation changes, essentially capping indexation rate for loans. The proposal is designed to lend a hand in helping young tertiary educated Australians pay off their student loans.
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Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts
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