As we approach May 9, we know we are going to hear much about what the Federal Treasurer may or may not do regarding the budget. Company tax is to be slashed – or cut just a little. There will be a package for first time home buyers…or maybe not.
Home ownership is certainly in the Treasurer’s sights. And not just for first timers.
One report this week said the federal budget has a multibillion-dollar hole because successive governments have failed to account for how declining home ownership will force more retirees on to the aged pension. Apparently, superannuation nest eggs are being whittled away by rental payments or mortgage payments for the increasing proportion of retirees who do not own their homes outright.
The report’s author, independent economist Saul Eslake, said home ownership had long acted as the “fourth pillar” of the Australian retirement system, alongside superannuation, the age pension and voluntary savings.
“Australia’s retirement income system has long taken for granted, or implicitly assumed, that the vast majority of retirees will have very low housing costs, because they will be living in homes which they own outright, or if they don’t own their own homes, they will be living in public rental housing where their rents are fixed at a (relatively low) proportion of their incomes.”
“This assumption is becoming less valid over time,” his report, titled No place like home: the impact of declining home ownership on retirement, states.
Banking on it
As we predicted last week, the Commonwealth Bank became the final major bank to hike home loan rates, blaming “rising costs and regulatory responsibilities” as the majority of homeowners face higher borrowing costs.
CBA, the nation’s biggest lender, said variable rates for owner-occupier customers repaying principal and interest would increase three basis points to 5.25 per cent, the equal-lowest of the big four alongside ANZ.
Variable rates for interest-only owner-occupier home loans will increase by 25 basis points to 5.47 per cent.
Landlords paying principal and interest will pay a further 24 basis points to 5.8 per cent. Interest-only investment loans will also increase by 26 basis points to 5.94 per cent. The changes are effective May 8.
CBA’s move followed ANZ and Citibank’s rises. Smaller banks like Bendigo and Adelaide Bank also increased variable investment loans 25 basis points to 6.01 per cent while owner-occupier rates were held steady at 5.48 per cent.
And another thing…
The true cost of being trendy has always been high, and we suspect not much will change after this revelation, but organic flour costs exactly six times more than non-organic at both Coles and Woolworths.
According to the Weekend Australian, carrots, green beans and muesli cost between 3.5 and 4.5 times more if they’re organic.
Dieticians and nutritionists have bad news for those buying organic food thinking it’s a healthier alternative — you’re wasting a lot of cash.
Data collected by the paper shows the price difference for a 30-item basket of all organic items versus an identical non-organic basket at Coles and Woolworths is slightly over 55 per cent when averaged between the two retailers.
This means a difference in spending of $60 ($190 on organic and $130 on non-organic ) a week. That’s an extra $240 a month, or almost $2900 a year.