Australia last suffered a recession in June 1991. Exactly 19 years ago. We have a forecast unemployment rate of 10% - over 15 % if you take into account the Jobkeeper subsidy and the millions of Australians and businesses now surviving on that suport. The IMF predicts that real GDP sill shrink by 7.2% throughout 2020 -thats an overall contraction on output and spending. I know many people feel this current and sudden hit to their living standard. But what does that mean if you have a mortgage to think about - and a house to protect?
Although thats bad, the IMF also predicts that we might be in the worst recession now, and depending on the extend of impact from Covid-19, we could see a stabilising in the September 2020 quarter. and then a return to slow growth. There is all likelihood that our economy might take until the second half of 2021 to return to pandemic levels.
According to REA, there are 6 property led steps that might aid a recovery in the economy:
Stamp Duty Reforms;
Incentives for the Development Industry;
More relaxed planning restrictions;
Boost to Social Infrastructure;
Returning to higher migration levels;
and better access to cheaper finance - which we talk about below.
So what can you do to ride this out and protect your health, family and home:
work with your bank to get the lowest rate they can offer;
check into repayment holidays - take advantage while you can;
if you can avoid it, DONT dip into your super especially nor for discretionary spending - selling out in a down market, and the long term multiplier effect of money with reduced tax implications, means you are significantly worse off than using the $10k now; and
if you cant get your bank to work with you, find someone you can trust and work with and refinance to a better rate while they are historically low.
Remember we dont offer any financial advice - we are not qualified as financial advisers. These are personal opinions and should not be relied upon for making financial decisions. Always seek the advice of accredited professionals.
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