13/10/2008 - 12:55

WA not fazed by global crisis: survey

13/10/2008 - 12:55

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Most Western Australian's remain upbeat about the outlook on their personal finances despite the global financial turmoil, a survey has found.

Most Western Australian's remain upbeat about the outlook on their personal finances despite the global financial turmoil, a survey has found.

The 2008 Financial Temperature Check Survey by broker Mortgage Choice found almost three quarters of respondents described their current financial situation in a positive light, while less than 5 per cent answered "terrible".

According to Mortgage Choice senior corporate affairs manager Kristy Sheppard, the survey results were surprising given the amount of attention bestowed on falling consumer sentiment and increasing homeowner financial troubles in a time of volatile global liquidity.

"With all the talk surrounding high living costs, mortgage stress, mortgage arrears, low consumer sentiment and the like, the vast majority of West Australians are positive about their financial situation moving forward, which is wonderful news," she said.

"The survey was completed over late September, so these uplifting results could indicate that month's interest rate drop - the first in seven years - contributed to overall consumer positivity. Whatever the reason, it is heartening to hear that many people are feeling optimistic about and prepared for their financial future".

Nearly 30 per cent of WA respondents said the most pressing financial concern was other cost of living expenses, followed by savings (24 per cent) and mortgages (22 per cent).

When asked to describe their financial plans for the next 12 months, 40 per cent of respondents said they would be a little restrained, 40 per cent said it was "life as usual" and 19 per cent would feel heavily restrained.

This compares with Queensland's results were 43 per cent said it will be "life as usual", while the national figure was at 35 per cent. New South Wales respondents were most likely to feel most restrained.

Looking at the sub-prime crisis, 48 per cent of WA respondents replied that they were a little concerned, 20 per cent were somewhat concerned while 19 per cent were very concerned.

 

Below is the statement:

Mortgage Choice, Best in the Mortgage and Finance Industry*, found that despite the international credit crunch and high interest rates, almost three quarters of West Australians regard their current financial situation in a positive light.

73% of WA respondents to the mortgage broker's independently commissioned 2008 Financial Temperature Check Survey, 42% of whom were mortgage holders, described their outlook on personal finances as solid (14%) or reasonable/moderate (59%). 22% said it was weak and less than 5% answered 'terrible'.

According to Mortgage Choice Senior Corporate Affairs Manager, Kristy Sheppard, the survey results were surprising given the amount of attention bestowed on falling consumer sentiment and increasing homeowner financial troubles in a time of volatile global liquidity.

"With all the talk surrounding high living costs, mortgage stress, mortgage arrears, low consumer sentiment and the like, the vast majority of West Australians are positive about their financial situation moving forward, which is wonderful news," she said.

"The survey was completed over late September, so these uplifting results could indicate that month's interest rate drop - the first in seven years - contributed to overall consumer positivity. Whatever the reason, it is heartening to hear that many people are feeling optimistic about and prepared for their financial future".

Key Findings

- 59% described their current financial situation as 'reasonable/moderate', while 14% answered 'solid'
- 33% said their financial situation is improving, while a further 42% say it is stable
- 19% said their financial plans will be heavily restrained over the next 12 months, whereas for 40% it will be 'life as usual'
- 88% were concerned about the impacts of the global financial crisis
- 81% were worried the effects of inflation
- 23% had a maxed out credit card

The most pressing financial concerns for West Australians were 'other cost of living expenses' (28%), followed by saving as much as possible (24%) and mortgage/s (22%).

Financial Situation

When asked if their financial situation is looking up or not:

- 33% (compared to 36% nationally) said it was improving
- 42% said it was stable
- 25% expected it to get worse.

The state most likely to expect improvement was New South Wales, at 41%, while Tasmanians were the most likely to expect a worsening of their situation, at 29%.

When describing further their financial plans for the next 12 months:

- 40% of WA respondents said they would be a little restrained
- 40% said it was 'life as usual'
- 19% said their financial plans would be heavily restrained
- 1% said they would be completely unrestricted.

In this respect, QLD respondents were least likely to feel their plans would be restrained - the state's 43% who said 'life as usual' compared to 35% nationally. NSW respondents were most likely to feel most restrained.

Interestingly, 87% of WA respondents had decided to not decrease their mortgage repayment amount, despite that option being available thanks to the September rate cut.

"It is very surprising to see that so many will keep meeting their regular repayments and not take advantage of the September rate decrease, which would provide the average borrower with $40-$50 extra per month in their budget. It seems most are happy to restrict their spending and forge ahead with repaying at a higher rate, thereby saving them significant interest and time over the loan term," Ms Sheppard said.

Global Financial Crisis, Inflation, and Other Concerns

In regards to the US sub-prime crisis that is causing global shockwaves, 88% of West Australians said they were concerned. As to what extent:

- 48% said 'a little'
- 20% were somewhat concerned
- 19% were very concerned.

The vast majority, 81%, were worried about inflation, which was 1 percentage point above the national average. 14% were not worried, 3% did not care and 3% did not know what inflation was.

Only 22% of WA respondents said their most pressing concern was their mortgage; given 42% of all the state's respondents had a mortgage it appears the majority are comfortably repaying it. Other concerns included:

- Other cost of living expenses (28%)
- Saving as much as possible (24%)
- Petrol prices (17%)
- Credit card/s (5%)
- Personal loan/s (4%).

"It is encouraging to see a large number of West Australians are still determined to save as well as maintain their cost of living," said Ms Sheppard. "There is very much still a culture of saving in this country".

Nevertheless, a concerning finding was that 23% had a maxed out credit card. This compared to 24% nationally and was somewhat below NSW respondents, who were most likely to at 29%.

Outlook for Property Prices

As for predictions on the future direction of Australian property prices, the most popular responses for all states was: 'stabilised for now, not sure what will happen', which 34% of West Australians agreed to.

The state's next most popular responses were 'stabilised now, about to head down' (21%), 'stabilised for now, about to head up' (21%), 'heading down and will continue to' (14%) and, lastly, 'heading up and will continue to' (10%).

Another important finding was that 56% of West Australians were unaware that when a lender decreases the rate on a mortgage product, it does not necessarily drop the repayments on individuals' mortgages, unless requested.

However, WA had the highest number of aware respondents.

 

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