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Financial hardship rises for sixth consecutive quarter: NAB 

The major lender has found the number of Australians who have experienced financial hardship rose to 44 per cent in Q3 2023.

Major lender National Australia Bank (NAB) has revealed that the number of Australians who experienced financial hardship has risen for the sixth consecutive quarter, up to 44 per cent in the third quarter of 2023 (1 July to 30 September).

In its consumer insights report, the big four bank found the number rose from 43 per cent in the second quarter of 2023 and up from 36 per cent a year prior in Q3 2022.

Among those who experienced hardship in the recent quarter, the predominant reason found was due to not having enough money for an emergency, 26 per cent up from 22 per cent a year earlier.

NAB found that household savings that peaked at 23.6 per cent in March 2020, amid the first COVID-19 lockdowns, have now fallen to 3.2 per cent in the recent June quarter, stating that it had been driven by a range of factors including “higher interest payable on dwellings, income tax payable, and increased spending by households due to rising cost-of-living pressures”.

The recent quarter also saw 40 per cent of lower-income earners state that their savings declined in Q3, with 23 per cent expecting them to fall further over the next 12 months.

The lender found that the second most common form of hardship, faced by approximately one in five Australians (20 per cent), was not having enough for food and basic necessities (up from 15 per cent in Q3 2022) or being unable to pay a bill (up from 15 per cent the previous year).

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NAB also found that 10 per cent suffered due to not having enough money to pay off personal loans, up from 7 per cent a year ago, with the number of people who stated they were unable to pay their home loan or mortgage rising to 7 per cent in Q3, up from 3 per cent at the same time last year.

The report revealed that those experiencing financial hardship were highest among people aged between 18 and 29 years, at 56 per cent, followed by those in the 30–49 age group at 54 per cent, with those in the over-65 age group faring the best at only 22 per cent.

Financial hardship remains most prevalent in rural areas according to NAB, with six in 10 people in rural areas impacted in Q3, up from 47 per cent a year ago. This was almost twice as high as in capital cities where only one in three people experienced some form of financial hardship, slightly higher than the previous year of 30 per cent.

The growing financial hardship problem has been further demonstrated by the continued increase in the number of Australians who missed a bill or loan payment, with 27 per cent admitting to it, up from 20 per cent a year ago.

NAB found that the most common type of missed payment overall was electricity, water, or gas bills, 12 per cent compared to 10 per cent a year ago. Those missing a personal loan repayment also increased to 7 per cent compared to 4 per cent a year ago, while missed mortgage payments also rose to 6 per cent from 4 per cent a year prior.

It followed lenders being urged at the Australian Securities & Investments Commission’s (ASIC) Annual Forum 2023 last week, to improve their hardship services with a rising number of hardship applications streaming in.

[Related: Home loans the top reason for hardship]

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