Significant Aussies feel the pinch of rising costs of living

As per recent research, more than half of Aussies feel worried about RBA announcing its cash rate stance on the occasion of Cup Day tomorrow. Rising costs of living have been bothering households for quite some time now and are evident from the dropping savings ratio as per the ABS data in the figure below:

In fact, it was also stated that a recent rise in new listings was a result of households exiting their mortgages prematurely attributed to rising costs of living and fear of expenditure spilling out of their safety net ultimately lending them in financial bad waters. Households who have managed to keep their heads above the water have been patiently waiting for the Central Bank to cut the cash rates to ease the financial strain on them.

With the Holiday season coming back, many households have to, unfortunately, squeeze their budget even further as any hopes of slashing cash rates have already been doused by RBA owing to sticky inflationary pressures in the services sector even when the headline inflation levels have dropped between 2 - 3% of target levels.

Economists strongly believe that the main reason for the headline inflation to fall within the target range is because of government subsidies like recent electricity rate cuts and other reliefs like the Commonwealth rent assistance program. While the actual trimmed mean inflation that affects policies is still well above 3% levels.

RBA hasn’t increased the cash rates since the last hike to 4.35% the previous year, with inflation levels softening it is expected that the central bank will re-evaluate its position in the early new year providing relief to mortgage holders. Until then Aussies will have to keep their heads above the water and keep it together.

OM Financials is here to help guide you through these choices, offering insights and personalized strategies tailored to your needs. Connect with us to understand how you can make the most of this stable period and prepare for future shifts in the mortgage landscape.