Saturday, September 23, 2017

Given her fame and fortune, it’s pretty easy for Beyoncé to sing about being “up in the club, just broke up” – however for the majority of newly single ladies, life is more like an Adele heartbreak song. And on top of all the emotional turmoil involved with a break-up, new research commissioned by State Custodian Home Loans, shows that financial worries are also a major concern for many women.

The survey studied over 1,000 Australian women and discovered that almost 50% of single women and 60% of single mums were concerned about their lack of financial understanding. Single mums were also more intimidated by the big banks and other financial institutions, with many preferring to simply take advice from family and friends, rather than seek out professional guidance.

“I can understand if you’re a single woman, or a woman on your own with kids, how intimidating some institutions can feel,” says Joanna Pretty, State Custodians general manager. “But I’d advise women to talk to different institutions and experts, such as financial advisors or accountants, to see who they’re comfortable with and how they can help.

“Finding people who can give you the right information and products, and reassure you they’ll look after you is key. Trust is very important in dire situations and it is vital single women financially educate themselves.”

One of the key factors in any divorce is the family home – not only is it a couple’s greatest asset, it’s also the heart of the family unit. However, putting concerns of the heart in front of the realities of budget, can put unwarranted stress on finances and emotions. Despite this, a third of all women in the survey said they would be reluctant to move and downsize.

“The home can hold great emotional attachment and is familiar for kids,” said Pretty. “When women lose their jobs or get divorced, often they want to hold onto a home so they’ll feel secure. However, you need to think about it in practical terms. If you can’t handle the mortgage and it’s going to financially wipe you out in two years’ time, get advice and consider your options.”

So, to avoid turning one of life’s hurdles into a major catastrophe, what should women be doing to ensure a brighter financial future:

Be Prepared – Educated yourself about your finances. Draw up and get on top of a budget so you know exactly what’s coming in and going out each month. Set up a contingency plan so you have a clear roadmap to follow should anything happen to the family’s breadwinners.

Save for a Rainy Day – If you don’t have any savings, start saving. Skip a coffee, cancel your cable TV or cut down on the takeaways and put the money into a savings account. Every little helps and it will soon build up into a fund to fall back on in an emergency.

Be Realistic – Should the worst happen, don’t let emotions cloud your judgment. If you can’t afford to remain in the family home after a divorce, move. The capital you release will provide a financial buffer that will ease your move into a new house and prevent you from digging deeper into a pit of debt.

Talk to the Pros ­– Don’t just rely on the advice of family and friends. Make an appointment with your mortgage broker and talk to a financial adviser. They are the experts and are there to help take some of the stress out of your difficult situation and help save you money.

                         

Despite the banks’ tightening of their lending restrictions, activity in the investor segment of the market is still on the rise. Figures for January show that investor lending increased by 4.2%, marking a dramatic 27.5% increase over the past 12 months, with interest in the Sydney and Melbourne markets still running hot. This is the most marked growth since the Australian Prudential Regulation Authority (APRA) put a cap on investor credit growth of 10% per annum back in 2015.

Although the average size of loans has only risen slightly, despite stronger house-price growth, should this trend continue, further measures from the Reserve Bank of Australia (RBA) and APRA to cool investor activity seems highly likely.

Indeed, the language coming out of the RBA is all pointing to tougher macroprudential measures being introduced over the coming months. In a recent speech to government, RBA governor Philip Lowe underlined the need for greater regulation, should investor lending continue to grow.

In recent months nearly half of all banks and lenders have raised their loan rates for investors, with the average price now 29 basis points above the average price for owner-occupiers. As this is not denting investor confidence, greater measures to slow property investment seem certain, and could include higher capital requirements or slashing the banks’ investor lending growth to 7% year-on-year. 

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Contact Details

Zippy Finance 

PO Box 3078
North Turramurra
NSW 2074

T 1300 855 022 

Louisa Sanghera is a credit representative (437236) of BLSSA Pty Ltd ACN 117 651 760.  Australian Credit Licence 391237. ABN 85 168 278 975.

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