5% installments for 10,000 regional buyers

Super Saturday for 10,000 first regional buyers, a in 10 compose super risk, and the struggle to save is real. Here are five things you may have missed this week.

Regional Accelerated Home Ownership Guarantee

Saturday, October 1 sees the launch of the new Regional Home Ownership Guarantee, three months ahead of schedule from its previous launch date of January 2023.

The guarantee provides the ability for up to 10,000 first-time homebuyers in rural areas to buy a home with as little as 5% down payment and pay for mortgage insurance without a lender (the federal government guarantees the 15 % remaining).

To be eligible, home buyers must have lived in the regional area or adjacent regional area in which they are buying, for the 12 month period prior to signing their home loan.

Income limits also apply. Singles can earn up to $125,000 per year, or $200,000 for a couple combined.

The property price caps for the Regional Home Ownership Guarantee are shown in the table below.

regional home ownership guarantee
Source: National Housing Finance and Investment Company

One in 10 Australians reduce super risk

Over the past six months, more than one in 10 Australians (11%) have changed their super risk profile to a more conservative risk profile in a bid to protect their nest egg against market share drops, research shows. from the Finder.

Alison Banney of Finder says the pandemic and recent equity market turmoil has caused members to assess their fund’s risk/reward profile.

She adds: “Many people are looking for less volatility due to macro factors such as inflation and an impending recession.”

However, it’s worth remembering that super is a very long-term investment, and opting for a more conservative style of investing can mean missing out on healthy returns over time.

Figures from SuperRatings show that over the past 10 years, growth-style funds have achieved average returns of 10.1% per year. Balanced funds posted average annual gains of 8.9%, and stable capital funds generated average returns of 5.2% per year.

As a guide to the difference these returns can make over a working life, MoneySmart’s super calculator shows that a fund member aged 30 today, could retire at age 67 with the following super savings :

  • $972,000 if they opt for a growth-style fund,
  • $708,000 with a balanced fund, or
  • $287,000 with a stable capital fund.

As Banney notes, “Slowdowns don’t last forever – stock markets have always rallied and risen over the long term.

“If you switch your super to a more conservative option after the market has already fallen, not only are you locking in that loss, but you also risk missing out on the rebound when the market recovers.”

One in five people do not save regularly

The higher cost of living makes saving more difficult and weighs on the country’s household savings rate, which shows the percentage of disposable income we keep.

The savings rate plunged from 23.7% at the start of the pandemic to 8.7% currently.

savings rate

A survey by Savvy shows that one in five Australians do not save regularly and one in four manage to save just $250 a month or less.

Savvy’s Bill Tsouvalas notes that even in times of rising costs of living, saving money is more important than ever.

“Although everything seems to be getting more expensive, now is not the time to stop putting money aside for the future,” he says.

Could credit unions be facing a critical moment?

Last week, Federal Treasurer Jim Chalmers approved two proposed mergers of customer-owned financial institutions – Heritage Bank and People’s Choice Credit Union, and Greater Bank and Newcastle Permanent Building Society.

Further couplings could be underway with Community First Credit Union and Australian Mutual Bank in talks on a possible merger.

This is a continuing decline in the number of credit unions in Australia, which stood at over 120 in 2004 but had fallen to half that number by 2018.

Rising regulatory compliance costs are a major driver of mergers.

While the number of credit unions is down, the number of customers is not. Five million Australians have a bank with a customer owned bank according to the Customer Owned Banking Association.

Millionaire? Let’s talk ‘multi-millionaire’

Credit Suisse’s latest Global Wealth Report shows that 400,000 more Australians have become millionaires in 2021, largely thanks to higher property values.

This means that 2.18 million Australians are now millionaires – not bad for a population of 26 million.

But a million dollars is a small change for a select few.

Data from Frank Knight Wealth shows that the global population of ‘Ultra High Net Worth Individuals’ (UHNWI) – people with net assets of over $30 million (A$46 million+), has increased by 9 .3% last year.

Even so, only 610,569 people worldwide have reached “ultra-rich” status.

North America dominates the list of UHNWIs, accounting for more than 12% of their global population. But here too, Australia is more than its weight, with 9% of the world’s ultra-rich.

Rises in asset prices – from property and stock markets to luxury collectibles, have all helped to boost the fortunes of the super rich.

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