5 Finance Changes For 2020

January 09 2020

Ways to save and make money in the new year.

As we roll into the early days of a new decade there are plenty of changes afoot in the world of finance and money that could affect you. From better first home loan buyer opportunities to the rise of the neo-banks, there is something here for just about everyone.

First home loan deposit scheme kicks into gear

The First Home Loan Deposit Scheme came into effect on 1 January 2020 and aims to support up to 10,000 home loans each financial year.

This scheme set up by the federal government will guarantee mortgages for first home buyers who have only saved a 5% deposit, effectively helping those eligible for the scheme to buy sooner without paying lenders mortgage insurance premiums.

Eligible first home buyers can't be earning more than $125,000 a year ($200,000 combined for couples) and are subject to property value caps.

Do the hustle

Wage growth has really slowed down over the last few years in Australia.

Combined with the increase in the cost of living and rising property prices, more and more Australians are looking to pick up a second job or a side hustle to boost their income this year.

Our research revealed that 43% of working Australians are planning to pick up some work on the side to supplement their incomes. This includes renting their properties out on sites like AirBNB, signing up to provide services on Airtasker or offering up their vehicles for car-sharing or even driving for ride-sharing services such as Uber and Ola.

Rock bottom rates

According to the Finder RBA Cash Rate Survey, 66% of economists on the panel predict the cash rate will be cut again in February 2020. If it is cut by 25 basis points, Australia would hit a historical low of a 0.50% cash rate.

While lenders don't have to pass on the cut to mortgage holders, our research shows that smaller lenders were more likely to pass on full cuts in 2019. In contrast, big banks only passed on one of the three cuts.

If you have a mortgage this is a great time to consider refinancing. While interest rates starting with a "3" were the lowest in the market until recently, we're now starting to see some with a "2". Refinancing your home loan can save you thousands of dollars over the life of the loan, so why not compare your current rate to what else is out there?

Health insurance hikes

In Australia every year, health insurance premiums rise on 1 April. This year, it's predicted that they will rise again by an average of 2.92%. The annual increase will range from fund to fund, with the lowest increasing by 1.98% and the highest going up by 5.63%.

As some kind of rise is inevitable it pays to compare your premium every year and switch to a fund that won't cost too much more or to where you have the opportunity to save money.

The rise of the neobanks

"Neobank" might sound like something from a futuristic novel or movie but they are very much here and happening right now and even better, this kind of new bank offers a lot of advantages to savvy customers.

So what exactly is a neobank? In a nutshell, it is a new type of bank that lives entirely on your smartphone. These banks have no branches or the kind of online banking you get through traditional banks. This gives them an advantage in terms of keeping overheads down and using up to date apps that don't have to run on the unwieldy legacy systems of banks of the past.

While these banks aren't for everyone and not all offer a full suite of services as yet, they are definitely worth investigating. And if you are concerned about your money, these new banks are fully approved and regulated by the Australian Prudential Regulation Authority (APRA) which also regulates traditional banks, super funds and insurers. Currently, funds of up to $250,000 are covered by the government guarantee.

Full Article: https://www.finder.com.au/5-changes-to-money-in-2020

Browne, K. (2020, January 3). 5 finance changes for 2020. Retrieved from https://www.finder.com.au/5-changes-to-money-in-2020