Australians are placing their money into savings and paying down debt rather than seeking credit, according to ING Direct’s Financial Wellbeing Index.
The report examined information from the first quarter of 2013, and took into consideration factors such as credit card and mortgage debt, savings, investments, household income, and the ability to pay bills.
Results showed that median savings for households in Australia have reached $15,427. This is the highest savings figure since 2010, and is a notable increase from results seen in mid-2011 of $5,155.
This may come as positive news for retailers in Australia, as it shows that people are becoming more comfortable with their finances. Increased savings may potentially have a flow-on effect to consumer confidence, as people will feel that they can spend more.
New South Wales saw the best rate of performance, with household savings reaching above the national median to $15,907.
ING Direct has attributed these large increases in savings to better mortgage affordability, as the current low interest levels are providing households with the opportunity to pay down their mortgages at a cheaper rate.
Executive director customer at ING Direct John Arnott stated that it’s very welcoming to see increases in savings for the first quarter, which is a time where there is usually a cash drain after the Christmas and holiday season.
“The continued growth in savings since mid-2011 reflects the commitment of Australians to building a buffer of cash, and it is not surprising that high levels of savings are supporting increased financial confidence among households.”
Findings from the report showed that 71 per cent of people are comfortable with their current level of savings, with baby boomers and Gen Y leading the way at $17,744 and $14,377 respectively.