How Silent Spending Is Cutting Your Borrowing Power by 40% | Australian Home Loan Reality
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What silent spending habits are impacting Australian homebuyers?
It's the Real Estate Podcast brought to you by ANZ Home Loans for financial well-beings.
Hey, welcome back to the Real Estate Breakfast as we dissect the Australian property market together. And this week, interestingly, we have been looking back at the 1970s real estate in Australia. Which was a time of change for the country? And just picking it up from where we left off a couple of days ago, outer suburban expansion accelerated across Brisbane, Perth and Melbourne's fringe in the 1970s. Larger house and land packages became the dominant ownership model and which really did reinforce Australia's suburban identity and preference for detached homes. And by the late 1970s, higher density living began gaining traction, especially in inner Sydney and Melbourne. Australia experienced high inflation throughout the 1970s, which directly impacted mortgage rates and borrowing power.
Now, property became both a hedge against inflation and a risk during economic instability, a theme that still resonates very much in today's modern cycles. And the one thing that is clear with looking back into the 1970s when it comes to real estate is that there were challenges. There were high interest rates and there was uncertainty. And we think, and I mentioned this a couple of days ago, that what is happening to us now is unique. No, it ain't. It happens in other cycles.
How did the 1970s influence the current Australian real estate market?
And if you're struggling at the moment within real estate, you might want to let us know how your property journey is going. You can always reach us on our email, which is myrealestatepodcast at gmail.com. Now, it is a Friday, February the 20th, and what we were just talking about with the struggles kind of leads us in nicely to what we're going to be talking about this morning. Because nine in ten prospective Australian homebuyers are jeopardising their property dreams by leaking property. up to $1,500 monthly on a silent spending spree. Now, PropTrack tells us that these small daily convenience purchases from subscription services to food delivery apps significantly reduce borrowing capacity. A 90-day spending audit is recommended to cut out some of these costs.
And we're going to talk about this by taking you right now to Melbourne to catch up with Damien Medici, who is a director at Margin Finance. And good morning to you, Damien. Welcome on this Friday morning to the Real Estate Breakfast. Yeah, as I say, banks, they treat these small daily habits as permanent liabilities rather than optional extras. So it's a bit of a worry for people saving up. Yes. Good morning, Craig. Thanks for having me.
What role does inflation play in mortgage rates and borrowing power?
They definitely do. It's the silent killer that I like to call it. It's the habits that slowly creep up that form this snowball of where's my money gone is the conversation that people often find themselves at the end of a pay cycle. Where's my money gone? It's left. Yes, it's definitely a silent killer. I can agree with you on that one. And this silent spending, it can slash the borrowing power, as I mentioned, by up to 40%, making that home loan just so much more difficult to secure, which obviously you see. Yeah, look, it definitely does. And I think the hardest thing with this as well is banks are okay in understanding what's discretionary and what is not. But I think to go one step further, it's more the borrower really understanding, well, how much can I commit to?
And they might have a false sense of their budget that they can allocate towards a mortgage because they don't truly understand exactly how much their budget allows them to spend on the mortgage because they haven't audited or they don't know exactly where their money is going. Yeah, and it's really one large purchase that ruins a budget, but rather the steady dripping of this everyday spending that you're talking about. We're talking about daily coffees and midweek takeaways that can erode pretty quickly and add up. Spot on. I like to use the analogy of going to the gym. If you go to the gym once and do a really big workout, probably not a whole lot is going to change.
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Chapters
7 chapters
1
What silent spending habits are impacting Australian homebuyers?
0:02–1:55
2
How did the 1970s influence the current Australian real estate market?
1:55–3:24
3
What role does inflation play in mortgage rates and borrowing power?
3:24–6:00
4
How can a 90-day spending audit improve borrowing capacity?
6:00–8:07
5
What are the common unnoticed expenses that reduce borrowing power?
8:07–10:31
6
How can individuals identify and cut unnecessary subscriptions?
10:31–12:16
7
What strategies can help control everyday spending habits?
12:16–14:11
Speakers
3 identifiedMore from Aussie Real Estate Podcast
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