What Aussies Are Doing To Cope With The Cost-of-living Crisis
Limiting spending, refinancing loans, moving back home with mum and dad and working a side hustle are popular options being adopted today
3 min
Mortgage holders are limiting household spending and refinancing their loans, while a rising number of young Australians are moving back home with their parents. These are some of the ways in which people are dealing with today’s cost-of-living crisis, which has been caused by the highest inflation rate in two decades along with rising interest rates and rents, according to research by Finder.
Three in four Australians surveyed in September said they were somewhat or extremely stressed about their financial situation. This includes 84% of mortgage holders, up from 76% in September 2021. Finder says almost $15,000 in extra interest costs have been added to the annual repayments of an average Australian home loan. And that was before the Reserve Bank of Australia raised the official cash rate again this week. The RBA raised rates by 25 basis points to 4.35%. That was the 13th increase since May 2022 and takes the cash rate to its highest level since 2011.
The research cites data from the Australian Bureau of Statistics showing the total monthly value of refinanced home loans peaked at $22 billion in June. Finder says more than 70% of refinancing borrowers were going to a new lender rather than renegotiating with the existing one. However, the savings were fairly small. On average, refinancers went from a variable rate of 5.01% to 4.78%.
Graham Cooke, Finder’s Head of Consumer Research, said “the willingness of homeowners to refinance for even marginal gains underscores the pervasive cost-of-living crisis, reflecting a desperate search for any fiscal relief.” He added that millennial homeowners were struggling the most today. “This could be a sign that they jumped in when rates were at record lows and were unprepared for an environment where rates and repayments increased.”
Finder says young renters are increasingly moving back in with their parents to escape rising rents or to save to buy a home. Unaffordable rents prompted 30% to move back home. A further 30% did so to save money for a home deposit, while 14% said the loss of a job forced a change in living arrangements. Mr Cooke said interest rate rises were actually having a higher impact on renters, given landlords typically pass on higher costs to tenants through rent increases.
Cutting discretionary spending is another method of coping with rising costs. The Finder research shows 45% of Australians have cut back on dining out or ordering home delivery, 32% are shopping around for better prices, 23% have reduced beauty and self-care treatments, and 19% have cancelled a holiday. A small proportion (3%) have moved their child to a different school with lower fees.
Refinancing advice
Mr Cooke said it was important not to rush a refinancing decision. “There is a significant gap in rates offered by different lenders for comparable loan products. The best thing you can do is take the time to review and compare your home loan options to ensure you’re getting the most competitive rate. It’s never too late to find a better home loan deal.”
Advice if you’re moving back home
Mr Cooke said there was no point ‘returning to the nest’ without changing your spending habits. “Prioritising a budget is critical. Start cutting out non-essentials and look for ways you can save money. Working out all your expenses to the smallest detail will give you an idea of how much capacity you have to save.”
Tips for cutting spending
Finder says shopping around can help reduce non-discretionary spending as well. Finder recommends that consumers consider switching energy providers and insurers, and use a high-interest account for savings. RateCity recently reported that nine financial institutions on its panel are now offering savings account interest rates that are above inflation at 5.5% or more.
Take up a side hustle
Finder research also shows 35% of Australians are earning extra income through side hustle jobs like dog walking, mystery shopping, tutoring, freelancing and ride-share driving. Popular non-employed side hustles include recycling cans and bottles, making and selling goods, selling pre-owned goods and renting out a spare room or garage.
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A Denver condo that hit the market earlier this week for $16 million is now the Mile High City’s most expensive listing.
The new listing by far beats the next-priciest home for sale, a condo in a new development that was put on the market at the beginning of the year for about $9.79 million.
The city’s most expensive single-family home is asking just shy of $9 million—the metro area’s priciest single-family homes tend to be in the Cherry Hills Village suburb.
At 7,145 square feet, the newly listed unit is nearly double the size of the one in the new development and more on par with the size of some of Denver’s most expensive single-family homes.
It’s on the top floor of a seven-story mixed-use building that was built in 2008 in the Cherry Creek neighbourhood, one of the most affluent areas of the city.
The last time the three-bedroom apartment sold was before it was even completed, though it’s been owned under a few different LLCs and trusts.
The seller, who Mansion Global wasn’t able to identify, bought the condo from the developer in September 2007 for $4.047 million, records show.
The design of the interiors is European-inspired, with decorative columns, elaborate millwork and ornate built-ins.
Plus, there’s a mahogany-clad study, a formal dining room that seats up to 30 guests and views of mountains and Denver Country Club’s golf course.
A private terrace adds 1,230 square feet of outdoor living space and features a fireplace and a built-in barbecue, according to the listing with Josh Behr of LIV Sotheby’s International Realty.
A representative for Behr didn’t respond to a request for comment.
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