‘Financially stressed’: Data reveals homeowners have four times as much savings as renters

The gap in savings between homeowners compared to renters, in the light in rising interest rates an off the back of the pandemic, have been revealed.

Homeowners across Australia have four times more savings than renters, according to latest data.

New data has revealed homeowners have close to four times as much money as renters.

RFI Global and DBM Atlas have released combined data from April, showing that the average homeowner with a mortgage has close to $19,000 more in their deposit accounts since the start of the pandemic, compared to renters who have saved an average of $5000.

RFI’s chief product officer Alex Boorman said, unlike renters, a high number of mortgage holders had also increased the value of their investments in shares and managed funds since early 2020.

RFI Global’s Alex Boorman.

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Mr Boorman said the data showed that renters had accumulated the least amount of wealth over the last three years, highlighting a huge sector of “finally stressed” Australians.

He said renters hadn’t received the same media attention as homeowners with the focus on rising interest rates and hardship faced by mortgage holders.

“Renters are a segment facing financial stress due to lower savings buffers,” he said.

“While interest rate increases do not impact renters as directly as mortgage holders, there are indirect impacts to renters – in particular, rising rental costs as landlords ‘pass on’ rate hikes to their tenants.

“Renters are also facing cost of living pressures.”

Renters have been described as a large sector of “financially stressed” Australians.

The RFI also point to “increased barriers” to people trying to enter the housing market.

“It is perhaps not surprising that Australians are taking out their first home loan later in life,” Mr Boorman said.

“Meanwhile, the median age of consumers saving for a deposit has declined over time. This means that customers are saving for longer – creating more opportunities for disillusionment with the process.”

RFI data from March 2020 to August 2022 showed an increase in young people saving for a house.

“However, in early 2023 we saw a reversal of this trend, with a significant decline in saving for a deposit among savers under 35,” Mr Boorman said.

“Looking at the big picture, this could reflect a sense among prospective buyers that affordability is slipping away from them and the barriers to entry are too high.”

RFI Global’s First Home Savers Report 2023 showed revealed the barriers to entering the property market, with the top barrier affordability of property closely followed by saving for a deposit.

RFI Global's "primary barriers" to Australians buying their first home

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“When there is the perception that house prices are increasing faster than people can ever possibly hope to save, there is also the likelihood some will just give up on the dream of home ownership,” Mr Boorman said.

“Rising rates have negatively impacted affordability and put simply, people are no longer able to borrow as much as they could before.

“It’s an incredibly hard market to enter, and renters are understandably put off.”

Originally published as ‘Financially stressed’: Data reveals homeowners have four times as much savings as renters