By Lucy Hughes Jones
(Australian Associated Press)
Australians are paying off their credit cards and saving more, but HECS debt is at a 14-year high.
Record low interest rates are helping people pay their debts, with four out of 10 households debt free in the June quarter, a report by St George and the Melbourne Institute shows.
However, HECS debt has hit its highest level since the Household Financial Conditions report began in 2001.
Just over 22 per cent of respondents owed money in relation to higher education courses, up from 20.9 per cent in the March quarter.
St George economists said the relatively high youth unemployment rate could be a factor, and it could also signal a higher number of Australians were enrolling in tertiary education.
But while HECS debt is on the rise, people are being diligent about credit card repayments.
The survey found that the number of households with credit card debt remained around six-year lows of just under 30 per cent.
More than half of those surveyed used 10 per cent or less of their income to put towards their total debt repayments, including credit cards.
The report also showed that the proportion of households continuing to fatten the piggy bank and `save a lot’ rose 1.9 per cent to 8.2 per cent – the highest level since December 2013.
Another 39 per cent said they maintained some form of savings.
St George’s head of Retail Banking for Outer Metro and Regional NSW, Neelam Tandon, said the results reflected the impact of falling mortgage rates in the first half of 2015.
“We’re seeing households not only reduce their credit card debt but mortgage debt has fallen by 3.3 per cent (in the June quarter),” she said.
WHAT AUSSIES ARE SAVING FOR
2. A rainy day
4. Debt reduction
5. Renovate the home
(Source: St George/Melbourne Institute)