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Retirement comes third for saving motivation
Australian households are continuing to boost their piggy-bank with the main motivation as for a holiday, with retirement coming third, according to a St. George-Melbourne Institute report.
The St. George-Melbourne Institute Household Financial Conditions report found the proportion of households 'save a lot' rose 1.9 percentage points to 8.2 per cent over the quarter – the highest level since December 2013.
Four in every ten households were found to be able to maintain some form of saving. The same number had no debt and more than half were using 10 per cent of less of their income for repayments. Savings towards property was the only area that saw an increase, lifting 1.6 percentage points.
Saving for holidays remained as the number one motivation for 59 per cent of respondents, followed by saving for a rainy day (57.4 per cent), retirement (46.8 per cent), saving to pay debt (43.6 per cent), and renovations (37.1 per cent).
St. George's head of retail banking for outer metro and regional NSW, Neelam Tandon, said not only are households reducing their credit card debt, but mortgage debt has fallen by 3.3 percentage points over the same period.
"We're now seeing household revert back to a cautious approach, with less people drawing on their savings and more people using the low interest rates to pay off their debt quickly," Tandon said.
However, the bank's chief economist, Hans Kunnen, said despite the rise in households saving towards a house deposit, the factor as a motivation has declined over the past 12 months.
He said it indicates that potential purchasers have become discouraged in some markets.
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