(Kate Browne, Head of Research at Compare Club)
17 October 2024 - As mortgage delinquency rates hit their fastest pace in two years, Compare Club's latest analysis reveals a critical lifeline for Australian households. With many having exhausted their financial buffers, strategic provider switches could still save up to $7,719 annually, offering much-needed relief amid rising living costs and persistent inflation.
Kate Browne, Compare Club's Head of Research, stated, "We're seeing a concerning trend where the financial cushions many Australians relied on are now depleted. January saw mortgage arrears rates jump from 1.4% to 1.63%* - the biggest leap since early 2022. It's clear that despite people's best efforts to budget and save, they're running out of wiggle room."
The potential savings identified by Compare Club have grown slightly from $7,388 in May 2023 to $7,719 today, underscoring the increasing importance of financial diligence in the current economic climate.
"Our latest analysis shows that despite increasing economic pressures, there are still significant savings for household expenses. Australians can put thousands back into their pockets by proactively reviewing their biggest bills," says Kate Browne.
“Switching providers, whether it’s energy right through to a home loan, can sound complicated, but in practice, it is far quicker and simpler than ever. Comparing and switching energy retailers and health insurance is as easy as a 20-minute phone call and zero paperwork. Refinance a mortgage now can take as little as a couple of days, and many lenders offer fully digital applications, which are far quicker and easier than what was required in the past. In short, it’s possible to save thousands of dollars in what would amount to an afternoon.” says Browne
The potential savings breakdown across different categories includes:
Home Loans: Average annual savings of $5,167, up from $4,680 in the previous year. This is based on an average mortgage of $615,178, with Compare Club's brokers reducing interest rates by an average of 0.84%.
Health Insurance: Families can save an average of $328.32 annually, while singles can save $196.85. These figures show a modest increase from last year's savings of $421.46 for families and $227.46 for singles.
Car Loans: Potential savings of $924 per year on an average car loan of $31,738.40 by refinancing from the average rate to the best market rate of 6.59%.
Energy: Savings vary by state, with regional NSW residents potentially saving up to $317.40 annually. This is a slight decrease from the previous year's maximum savings of $481 for regional NSW.
Credit Cards: An average saving of $908 over 12 months for those with an average credit card debt of $3,076 by utilising balance transfer options.
Life Insurance: Switching providers can save non-smokers up to $240 annually, while smokers can save up to $974.
"With the ongoing economic uncertainties, there's no better time for Australians to do a financial health check. The market remains highly competitive across various sectors, presenting numerous opportunities for savings. Energy and Health savings take just 20 minutes and there’s no paperwork,” says Kate Browne.
Compare Club's analysis also revealed that these savings could have significant long-term benefits if reinvested:
Reducing mortgage interest by up to $22,519 or shortening the mortgage term by 7 months
Growing to $19,358 over 10 years if invested in the S&P 500 Index
Increasing superannuation balance by $11,900 by age 65 for those under 35
"In these challenging times, every dollar saved can make a significant difference to Australian households," says Kate Browne.
-ENDS-
Notes:
*Bloomberg Data
For media enquiries:
Jasmine Kostas
Media + Capital Partners
0425 327 224
jasmine.kostas@mcpartners.com.au
About Compare Club
Compare Club is one of Australia’s fastest-growing personal finance marketplaces. It helps Australians save money by navigating complicated and important financial decisions. Compare Club’s panel of experts offers bespoke advice to over 3.6 million members making 1 million product enquiries per year on key financial decisions, including health insurance, electricity and gas bills, and personal, car, and home loans. Compare Club is locally owned and employs 350 passionate staff across Sydney, Melbourne, and Brisbane and another 50 staff in Indonesia and the Philippines.
