Felicity and Peter talk on Sky News Money about the mortgages that could be at risks if interest rates increase or wage growth continues to slow.
Many people don’t understand the amount (in real dollar terms) their mortgage will go up if interest rates change even a little bit.
When so many Australians have only 1-2 weeks of cash flow sitting in a bank account, the short term risk is in loss of employment, lowered hours or decreases in income levels.
Budgeting is no longer something that is done at school. People aren’t being taught the effects of compounding interest. One of the biggest downsides of this is that most people then also aren’t aware of the financial risks that their current borrowings represent, and don’t have a plan in place, or a sufficient safety net, in case something does change.