ABS

Growth in superannuation drove Australia’s managed fund industry to near-record levels in the December 2022 quarter. While most asset classes delivered positive returns and Australian equities outperformed, investors are looking more to offshore assets for portfolio diversification.

Analysts agree Australia’s big four banks are entering 2023 from a position of strength as they pass on rising interest rates to borrowers. However, headwinds remain, and the total return picture for shareholders looks more complex.

Australians are being hit hard by rising interest rates as banks seek to keep pace by lifting borrowing costs, and the RBA’s latest move will only add to the pain. Mortgage payments for employee households soared 27 per cent in the December quarter alone, and further increases are expected.

Highly anticipated new consumer price data showed the inflation rate in Australia hit its highest level since 1990 in the December quarter. But analysts are mixed on whether inflation will moderate later this year or become more entrenched.

The cost of living has risen dramatically in 2022, with the Reserve Bank of Australia increasing the cash rate seven times since April and the major banks keeping pace on mortgage rates. But there could be good news on the horizon.

Financial planners are advising Australians to diversify out of property and put more money into superannuation, as statistics show falling asset values contributing to a nearly $500 billion decline in household wealth for the June quarter.

The impact of higher interest rates imposed by the Reserve Bank of Australia is being felt, with borrowing capacity taking a dramatic hit across the nation.

Mortgage holders will start to see the effects of sequential rate rises by December, but it’s after the break that the real impact will hit home.

Higher interest rates could force some householders to default on home loan repayments, with new data showing the number of distressed home sales is on the rise.

A report by media research group the Nielsen Company following Australia-specific data collection shows there has been a significant spike in readership of business and finance news and commentary online.