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Cost of living putting Aussies under ‘extreme’ stress

Three in four Aussies are feeling “extremely” or “somewhat” stressed about their finances.

Aussie households are nearing the top of their financial pressure limits, as the cost of housing, groceries, fuel, electricity and more everyday expenses skyrocket.

Finder’s latest Cost Of Living Pressure Gauge found households were currently at an “extreme” pressure level of 79 per cent, up from 45 per cent three years ago.

More than three-quarters of Aussies said they were feeling “extremely” or “somewhat” stressed about their finances.

Composite image of person with Australian money and people crossing the street. Cost of living concept.
Household budgets are being pushed to the brink, as cost-of-living pressures continue. (Source: Getty)

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The research combines Reserve Bank (RBA) data, plus Finder’s own sentiment tracker, and takes into account housing stress, salary expectations, household debt, financial strain, savings, holiday plans, credit card debt, property values and inflation.

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With the official cash rate currently at 4.35 per cent - its highest since 2011 - and rents up 9.3 per cent over the past 12 months, both renters and homeowners are feeling the pinch.

Finder found 37 per cent of homeowners and 44 per cent of renters were finding it difficult to pay for a roof over their heads.

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Head of consumer research Graham Cooke said the results showed millions were under the pump.

“Despite a slight decline from the May 2023 peak of 85 per cent, current levels remain considerably higher than most of 2020 and 2021,” Cooke said.

“As households look to stretch their budgets further, this affects their ability to create a decent savings buffer to protect themselves from further pressure.”

The data also revealed how much the cost of living had changed in the space of three years. Back in November 2020, the cash rate had just been cut to a record low of 0.10 per cent.

Meanwhile, the annual inflation rate was just 0.9 per cent - a stark contrast to the 5.4 per cent recorded in September 2023.

While a large proportion of Aussies (68 per cent) were still feeling “extremely stressed” or “somewhat stressed” about their finances, a lower number of homeowners (18 per cent) and renters (32 per cent) were in housing stress.

Cooke encouraged households to look for areas where they could cut back without compromising their needs, and to shop around as much as possible.

RBA expected to give homeowners some relief

Mortgage holders may be getting some relief this Christmas, with the RBA expected to keep interest rates on hold when it meets tomorrow.

More than four out of five experts and economists surveyed by Finder think the RBA will keep the cash rate steady at 4.35 per cent, following lower-than-expected inflation figures.

The Big Four banks’ economic teams also believe the RBA will hold the cash rate tomorrow, with CBA, Westpac and ANZ saying the cash rate has now peaked, and just NAB forecasting one more rate hike early next year.

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