Money & Banking

Humble handbag smashes world auction record with $15m sale

It started life on an air sickness bag. It ended with someone in Japan spending €8.6 million ($15.29 million AUD) on it. No, not the bag you reach for mid-turbulence – THE bag. The original, one-of-a-kind, barf-bag-born Birkin. At a Paris auction that had more gasps than a Eurovision final, the iconic prototype Hermès Birkin handbag – sketched by Jane Birkin herself somewhere over the English Channel – sold for a frankly nauseating €7 million ($12.44 million AUD) before fees, setting a new bar for luxury handbags and spontaneous aircraft doodles. As the price soared past €2 million ($3.56 million AUD)... €3 million ($5.33 million AUD)... €5 million ($8.88 million AUD), the crowd broke into applause, whistles and likely a few whispered prayers that their plus-ones wouldn’t get ideas. When it leapt from €5.5 million ($9.78 million AUD) to €6 million ($10.78 million AUD) in one go, some probably checked their own bags for loose sketches, just in case. The lucky winner? A still-anonymous bidder from Japan, who triumphed after a ten-minute telephone bidding showdown that could've been scored like a tennis match. In the end, they took the prize for €7 million ($12.44 million AUD), bringing the final hammer price with Sotheby’s fees to €8.6 million ($15.29 million AUD) – a mere snip if you ignore every financial decision you’ve ever made. The price absolutely destroyed the previous record for a handbag, which was a dainty $513,040 ($770,490 AUD) shelled out in 2021 for another Hermès bag (the White Himalaya Niloticus Crocodile Diamond Retourne Kelly 28 – a name with more syllables than most people’s resumes). This means the Birkin is now officially the second most valuable fashion item ever sold at auction. Only Dorothy’s ruby red slippers outrank it, having clicked their heels all the way to $32.5 million ($49.43 million AUD) last year. Somewhere over the rainbow, indeed. The original Birkin isn’t just expensive; it’s delightfully quirky. It’s the only one with a non-removable shoulder strap (because Birkin had things to do), and came with a nail clipper. Yes, a nail clipper. Practicality, thy name is Jane. As Morgane Halimi, Sotheby’s head of handbags and fashion, put it with appropriate reverence: “It is incredible to think that a bag initially designed by Hermès as a practical accessory for Jane Birkin has become the most desirable bag in history.” Not bad for a design born out of spilled baby bottles and boarding pass chaos. Jane Birkin (actor, singer, fashion muse and mother) reportedly kept the prototype for nearly a decade before auctioning it in 1994 for AIDS research. Since then, it’s changed hands a few times, making its way back into the spotlight like a seasoned celebrity on a comeback tour. The previous owner, known only as Catherine B (because if you own this bag, you don’t need a last name), told journalists: “The price is the price of the Hermès story.” Which, translated, roughly means: "It's a nice bag. Also, it's basically priceless." To be fair, it is more than just a bag. It’s a symbol. A cultural artefact. A reminder that sometimes brilliance strikes mid-flight, and that fashion history can be born in the same seat pocket where you once stashed a sad sandwich and a crumpled boarding pass. As Birkin herself once joked before her passing in 2023: “They’ll say, ‘Like the bag,’ or something.” Honestly, Jane, we could do a lot worse. Images: Sotheby's

Money & Banking

Antiques Roadshow uncovers incredibly rare Beatles snaps

A lifelong Beatles fan has discovered that her teenage memories are worth more than just nostalgia – they’re worth a small fortune. Appearing on a recent episode of Antiques Roadshow, the woman brought along a well-loved album filled with original photographs from a weekend in July 1963 that would change her life forever. Back then, she and four Beatles-obsessed friends travelled to Great Yarmouth, England, just as the Fab Four happened to be in town. After seeing them perform live – “screaming like mad”, as she recalled – the group of girls got an insider tip from a local friend about where the band was staying. “We went and sat in the lounge and they came downstairs and sat with us,” she said, beaming as she shared the story. Among the photos and memories was something even more remarkable: four original Beatles autographs, carefully tucked into her diary from the trip. Antiques expert Marc Allum could hardly believe what he was seeing. “In addition to the photographs, you've got a little album here with something even more special in it,” he said, visibly impressed. Allum estimated the collection, particularly the autographs from John, Paul, George and Ringo, could fetch up to £5,000 – nearly $10,500 AUD – at auction. “Good gracious. Wow!” the stunned owner exclaimed, holding her priceless teenage memories a little tighter. It’s a story of friendship, fandom and a little rock 'n' roll magic – and proof that sometimes, history hides in the most unexpected places. Images: Antiques Roadshow

Money & Banking

Cheapest supermarket for winter shopping revealed

Aldi has once again cemented its reputation as Australia’s most budget-friendly supermarket, topping <a href="https://www.choice.com.au/shopping/everyday-shopping/supermarkets/articles/cheapest-groceries-australia" target="_blank" rel="noopener">CHOICE’s latest quarterly survey</a> on the cost of winter groceries. The consumer advocacy group compared the prices of an average basket of 14 common grocery items – including staples such as milk, chicken, and fresh fruit, as well as popular winter additions like vegetable stock, drinking chocolate, and butternut pumpkin. Aldi offered the most affordable basket at $55.35 without specials, with Woolworths close behind at $58.92, followed by Coles at $59.22 and IGA at $69.74. “Aldi had the best deal for shoppers looking to keep cosy this winter,” said CHOICE CEO Ashley de Silva. “Without specials, Woolworths had the cheapest chicken breasts and pumpkin, while Coles offered the best price on apples. IGA came out on top for carrots and garlic. For all other products in our basket, Aldi is your best bet.” When specials were taken into account, Aldi still led the pack, with its basket dropping to $54.44. Coles followed at $57.67, Woolworths at $58.86, and IGA at $67.54. “All up, if you’re planning a hearty porridge breakfast or wanting a cup of hot chocolate to keep you feeling snug, Aldi should be your first stop,” de Silva added. He also encouraged shoppers to look beyond supermarket choice for savings: “Checking the unit pricing, keeping an eye on specials, shopping around, and trying out house brand products can all add up to significant savings.” CHOICE field workers collected prices in March 2025 at 104 supermarkets across 27 locations nationwide. The group’s base basket includes full cream milk, Weet-Bix, Royal Gala apples, carrots, Cavendish bananas, strawberries and chicken breast fillets. This quarter’s additional winter items were vegetable stock, sour cream, drinking chocolate, butternut pumpkin, quick oats, garlic and onions. The findings come as supermarket prices remain a hot political issue. Cost-of-living pressures and alleged price gouging by major chains dominated debate in the last federal parliament. During the recent election campaign, Labor pledged to introduce laws to crack down on price gouging, while the Coalition promised to introduce divestiture powers that would allow the ACCC to force supermarkets to sell off stores to boost competition. Image: Pexels / Gustavo Fring

Money & Banking

What does Trump’s looming ‘revenge tax’ mean for Australia?

<div class="theconversation-article-body">The Australian Labor Party just won an <a href="https://theconversation.com/albanese-increases-majority-and-dutton-loses-seat-in-stunning-election-landslide-255616">election victory for the ages</a>. Now, it may be forced to walk back one of the key achievements of its first term. Here’s why: United States President Donald Trump is about to declare an income tax war on much of the world – and we Australians are not on the same side. Over in the US, the “<a href="https://www.congress.gov/bill/119th-congress/house-bill/1/text">One Big Beautiful Bill act</a>” – a tax and spending package worth trillions of dollars – has been <a href="https://www.theguardian.com/us-news/2025/may/22/what-is-trump-big-beautiful-bill">passed</a> by the House of Representatives. It’s now before the Senate for consideration. Within it lies a new and highly controversial provision: <a href="https://www.axios.com/2025/05/30/taxes-section-899-big-beautiful-bill">Section 899</a>. This increases various US tax rates payable by taxpayers from any country the US claims is maintaining an “unfair foreign tax” by five percentage points each year, up to an additional 20% loading. Having been an integral part of an international effort to create a global 15% minimum tax, Australia now finds itself in the firing line of Trump’s “<a href="https://finance.yahoo.com/news/revenge-tax-buried-deep-budget-213451951.html">revenge tax</a>” warfare – and it’s a fight we’re unlikely to win. <h2>A global minimum tax rate</h2> The origins of the looming income tax war <a href="https://www.oecd.org/en/publications/2013/07/action-plan-on-base-erosion-and-profit-shifting_g1g30e67.html">started in 2013</a>, when the Organisation for Economic Co-operation and Development (<a href="https://www.oecd.org/en/about.html">OECD</a>) released its plan to stamp out “base erosion and profit shifting”. This refers to a range of strategies often used by multinational companies to minimise the tax they pay, exploiting differences and gaps in the tax rules of different countries. The OECD’s first attempt to tackle the problem was a collection of disparate measures directed not only at corporate tax avoidance, but also controlling tax poaching by national governments and “<a href="https://www.theguardian.com/politics/2013/apr/29/sweetheart-tax-deals">sweetheart deals</a>” negotiated by tax officials. Under both Labor and the Coalition, Australia was initially an enthusiastic backer of these attempts. However, the project was not a widespread success. Many countries endorsed the final reports but, unlike Australia, few countries acted on them. After the failure of this first project, the OECD tried again in 2019. This evolved to encompass two “pillars” to change the global tax rules. <a href="https://www.oecd.org/content/dam/oecd/en/topics/policy-issues/cross-border-and-international-tax/pillar-one-amount-a-fact-sheet.pdf">Pillar one</a> would give more tax to countries where a company’s customers are located. <a href="https://www.oecd.org/en/topics/sub-issues/global-minimum-tax/global-anti-base-erosion-model-rules-pillar-two.html">Pillar two</a> is a minimum tax of 15% on (a version of) the accounting profits of the largest multinationals earned in each country where the multinational operates. Labor picked up this project for the 2022 election, <a href="https://jimchalmers.org/latest-news/media-releases/labor-s-plan-to-ensure-multinationals-pay-their-fair-share-of-tax/">promising</a> to support both pillars – and they honoured that promise. <h2>Mixed success</h2> Around the world, the two pillar project had mixed success. Pillar one was dead-on-arrival: most countries did nothing. But Australia and several other countries, mostly in Europe, implemented pillar two – the global minimum tax. The OECD has always maintained the base erosion and profit shifting (BEPS) project was a coalition of the willing, meant to rebalance the way income tax is allocated between producer and consumer countries, and rid the world of tax havens. In the US, Republicans <a href="https://www.reuters.com/world/us/yellen-us-negotiating-rd-tax-credit-part-global-tax-deal-2024-04-30/">did not share that view</a>. For them, BEPS was simply another attempt by foreign countries to get more tax from US companies. This Republican dissatisfaction with the OECD is now on full display. On the first day of his second term, Trump issued an <a href="https://www.whitehouse.gov/presidential-actions/2025/01/the-organization-for-economic-co-operation-and-development-oecd-global-tax-deal-global-tax-deal/">executive order</a>, formally repudiating any OECD commitments the Biden administration might have given. He also directed his officials to report on options for retaliatory measures the US could take against any foreign countries with income tax rules that are “extraterritorial” or “disproportionately affect American companies”. <h2>Why Australia is so exposed</h2> Australia could find itself in the firing line of Trump’s tax warfare on many fronts. And the US doesn’t lack firepower. Section 899 adds to a number of <a href="https://theconversation.com/what-is-the-90-year-old-tax-rule-trump-could-use-to-double-us-taxes-on-foreigners-248154">retaliatory tax provisions</a> the US already had at its disposal. The increased tax rates would affect Australian super funds and other investors earning dividends, rent, interest, royalties and other income from US companies. Australian super funds in particular are heavily invested in US markets, which have outperformed local stocks in recent years. It would also affect Australian managed funds owning land and infrastructure assets in the US, as well as Australian entities such as banks that carry on business in the US. And there are other measures that would expose US subsidiaries of Australian companies to US higher tax. The bill would even remove the doctrine of sovereign immunity for the governments of “offending” countries. <a href="https://www.ato.gov.au/individuals-and-families/your-tax-return/if-you-disagree-with-an-ato-decision/object-to-a-decision/what-to-include-in-your-objection/supporting-information-to-provide/sovereign-immunity">Sovereign immunity</a> refers to a tax exemption on returns that usually applies to governments. This means the Australian government itself could have to pay tax to the US. There are <a href="https://www.bloomberg.com/news/articles/2025-05-30/trump-revenge-tax-would-lower-foreign-investment-in-us-scorekeeper-predicts">concerns on Wall Street</a> this will dampen demand for US government bonds from foreign governments, which are big buyers of US Treasuries. The argument may sway some in the Senate – but how many remains to be seen. <h2>What Australia may need to do next</h2> We may be incredulous that anyone would consider our tax system combative, but enacting the OECD pillar two was always known to be risky. There are other, homegrown Australian tax measures that have drawn American ire. In 2015, Australia enacted an income tax measure (commonly called the “<a href="https://www.smh.com.au/business/the-economy/google-restructures-to-avoid-hefty-penalties-in-australia-as-tax-bill-hits-16-million-20160429-goi8fl.html">Google tax</a>”) specifically directed at US tech companies. In 2017, we followed this up with a <a href="https://www.ato.gov.au/businesses-and-organisations/international-tax-for-business/in-detail/doing-business-in-australia-or-overseas/diverted-profits-tax">diverted profits tax</a>. Trump’s bill specifically targets both measures. Tying ourselves to the OECD’s global minimum tax project might have seemed like a good idea in 2019. In 2025, it looks decidedly unappealing, and not just because of Trump. First, there is not actually any serious revenue in pillar two for Australia. Treasury’s <a href="https://archive.budget.gov.au/2023-24/bp2/download/bp2_2023-24.pdf">revenue estimate</a> totalled only $360 million after four years, just slightly more than a rounding error in the federal budget. Second, we are increasingly alone and vulnerable in this battle. It might feel emotionally satisfying to stand up to the US. If there was a sizeable coalition alongside us, there might be some point. If Trump’s One Big Beautiful Bill act does pass through the US Senate, the Australian government and business will be left exposed to much higher costs. Since abandoning the US market is not really an option, it might be time to surrender quietly and gracefully – by reversing, at the very least, the contentious bits of pillar two.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/257961/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> By <a href="https://theconversation.com/profiles/graeme-cooper-3215">Graeme Cooper</a>, Professor of Taxation Law, <a href="https://theconversation.com/institutions/university-of-sydney-841">University of Sydney</a> This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/australia-is-in-the-firing-line-of-trumps-looming-revenge-tax-its-a-fight-were-unlikely-to-win-257961">original article</a>. Image: Pexels / Nataliya Vaitkevich </div>

Money & Banking

Millions of Aussies set for a payrise

Millions of low-paid Australian workers will receive a wage boost from July 1, after the Fair Work Commission (FWC) announced a 3.5 per cent increase to minimum and award wages. The decision affects around 2.9 million workers and will lift the national minimum wage from $24.10 to $24.94 an hour – a weekly increase of nearly $32 for full-time employees. The FWC’s ruling strikes a middle ground between competing demands from unions and business groups. The Australian Council of Trade Unions (ACTU) had pushed for a 4.5 per cent rise, citing the need to help workers keep up with the cost of living, while employer groups including the Australian Chamber of Commerce and Industry had argued for a more modest 2.5 per cent hike. The 3.5 per cent rise is slightly below last year’s 3.75 per cent decision, but still exceeds the current annual inflation rate of 2.4 per cent. With the Reserve Bank forecasting inflation to rise to 3.1 per cent by mid-2026 as government energy subsidies wind down, the FWC’s decision offers workers a modest real wage increase. ACTU Secretary Sally McManus said the decision was a lifeline for workers living paycheque to paycheque. “When you’re on those wages, you’re not saving money. Everything you earn, you spend,” she said. “It’s about whether you can keep up with your bills or not, whether your life gets slightly better, stays the same, or goes backwards.” The ACTU had argued that sustained low wage growth in recent years had left many workers falling behind, and that the time had come for wages to catch up. McManus pointed to productivity improvements in sectors such as hospitality and retail – where many award-dependent workers are employed – as justification for a stronger rise. “The commission previously has said, ‘yes, these workers need to catch up, we’ve just got to wait for the right time’. We say now is the right time,” she said. But employer groups warned the decision will pile pressure on businesses already grappling with rising costs and weak consumer spending. The Council of Small Business Organisations Australia, representing many of the nation’s cafes, restaurants and retail stores, argued a 4.5 per cent jump could have triggered job losses or even business closures. “Anything higher than 2.5 per cent would place unsustainable pressure on small businesses, potentially leading to reduced employment opportunities, business closures, and broader economic harm,” the council said in its submission. The federal government stopped short of recommending a specific number, but called for a “sustainable” increase that would keep wages ahead of inflation without undermining economic stability. AMP chief economist Shane Oliver had forecast the 3.5 per cent increase, suggesting it would give workers a real wage gain without fanning the flames of inflation. “It strikes a balance between supporting household spending power and avoiding a wage-price spiral,” he said. While union leaders expressed disappointment that the rise wasn’t higher, the decision is broadly seen as a compromise designed to support both workers and businesses amid a fragile economic recovery. Image: Shutterstock

Money & Banking

Major bank announces huge home loan rate cut

The Commonwealth Bank of Australia (CBA) will reduce its fixed-rate home loans by up to 0.40 percentage points across all terms starting Friday, following a 0.25 percentage point cut to its variable rate in response to the Reserve Bank of Australia’s (RBA) recent cash rate reduction. The new rates will see CBA’s lowest fixed offering set at 5.49% for a three-year term. Despite the move, experts say the cuts are unlikely to spark a surge in homeowners locking in their mortgages. Sally Tindall, data insights director at Canstar.com.au, said the rate adjustments bring CBA closer to its major bank competitors but aren’t enough to significantly shift consumer behaviour. “CBA’s fixed rate cuts aren’t groundbreaking, but rather a bid to inch closer to its key competitors,” Tindall said. “Fixed rates have been falling fairly consistently this year, and we expect this activity will continue as banks price in the increasing likelihood of further cash rate cuts.” While CBA’s new rates mark progress, rivals remain more competitive. ANZ holds the lowest one- and two-year fixed rates among the big four banks, while National Australia Bank (NAB) continues to offer the most attractive three-, four-, and five-year fixed terms. Tindall also noted that with only a slim margin – just 0.10 percentage points – between current fixed and variable rates, many borrowers will likely hold off from locking in. “With the possibility of further RBA cuts ramping up, it’s hard to see many people jumping at the chance to lock up their mortgage for the next three years,” she said. “The majors might have to offer a fixed rate in the ‘4’s’ if they’re serious about getting people to lock in.” Canstar’s latest data shows a flurry of activity across the lending sector since the RBA’s decision. Twenty lenders have reduced at least one fixed rate this month, and five major lenders, excluding CBA, have already made cuts. Among them, BOQ, Community First Bank, Police Bank and Queensland Country Bank now offer at least one fixed rate below 5%, setting the benchmark at 4.99%. Tindall urged borrowers to carefully consider their financial situation and risk appetite when deciding between fixed and variable rates. “If you’re deciding between a fixed or variable rate, understand what might suit your finances and, to some extent, your personality. When you make a decision, take the time to look for a competitive rate,” she said. While the trend suggests fixed rates will continue to fall, CBA's latest move clearly shows the intense competition in the home loan market – one that still leaves many Australians hesitant to commit. Image: Supplied

Money & Banking

A quarter of a billion dollars in unclaimed Medicare rebates: here's how to claim them

More than a quarter of a billion dollars in unclaimed Medicare refunds are waiting to be returned to nearly a million Australians, with Services Australia urging people to check if they’re owed a share of the money. A staggering $260 million in Medicare rebates is currently unclaimed by 960,000 patients across the country. The unclaimed funds stem from GP and specialist visits where refunds were never processed due to incomplete or outdated bank account information. “You go to the doctor, you hand over your card and then you might not check what happens next,” said Justin Bott, community information officer at Services Australia. “Failing to follow up is what could be costing patients refunds they’re entitled to.” On a state-by-state basis, the figures remain eye-opening. Residents of New South Wales are owed $81 million, Victorians are missing $64 million, Queenslanders are due $51 million, Western Australians are entitled to $30 million, and South Australians could claim $19 million. The average unclaimed amount per person sits at around $265, but in some cases, individuals could receive over $10,000. One of the most affected demographics is young adults aged 18 to 25, who are often unaware of the need to update their details. The good news? The fix is simple. By logging into the MyGov portal and checking their Medicare account, Australians can update their bank details. Once updated, refunds are typically processed and deposited within three days. “It might not be you, but maybe it’s your child, your grandchild that has that money owing. Get them to check as well,” Bott urged. “Because again, what a great present to find that money being paid to them.” With hundreds of millions of dollars potentially just a few clicks away, Australians are being encouraged to act now and reclaim what is rightfully theirs. Image: Shutterstock

Money & Banking

RBA cuts interest rate - so what happens now?

<div class="theconversation-article-body"> The Reserve Bank of Australia <a href="https://www.rba.gov.au/media-releases/2025/mr-25-13.html">cut the official interest rate</a> for the second time this year, as it lowered forecasts for Australian economic growth and pointed to increasing uncertainty in the world economy. The bank lowered the <a href="https://www.rba.gov.au/cash-rate-target-overview.html">cash rate target</a> by 0.25%, from 4.1% to 3.85%, saying inflation is expected to remain in the target band. All the big four banks swiftly passed the cut on to households with mortgages. This will save a household with a $500,000 loan about $80 a month. Announcing the cut, the Reserve Bank <a href="https://www.rba.gov.au/media-releases/2025/mr-25-13.html">stressed</a> in its accompanying statement it stands ready to reduce rates again if the economic outlook deteriorates sharply. <blockquote> The Board considered a severe downside scenario and noted that monetary policy is well placed to respond decisively to international developments if they were to have material implications for activity and inflation in Australia. </blockquote> <h2>Inflation is back under control</h2> The latest <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release">Consumer Price Index</a> showed that inflation remained around the middle of the Reserve Bank’s <a href="https://www.rba.gov.au/education/resources/explainers/australias-inflation-target.html">medium-term target band of 2-3%</a> in the March quarter. The Reserve Bank was also comforted by the underlying inflation measure called the “trimmed mean”. This measure excludes items with the largest price movements up or down. The bank noted that it has returned to the 2–3% target band for the first time since 2021. This suggests inflation is not just temporarily low due to temporary factors such as the electricity price rebates. <iframe id="QQ6io" class="tc-infographic-datawrapper" style="border: 0;" src="https://datawrapper.dwcdn.net/QQ6io/" width="100%" height="400px" frameborder="0" scrolling="no"></iframe> In February, Reserve Bank Governor Michele Bullock <a href="https://parlinfo.aph.gov.au/parlInfo/download/committees/commrep/28670/toc_pdf/Economics%20Committee_2025_02_21_Official.pdf;fileType=application%2Fpdf">conceded</a> the bank had arguably been “late raising interest rates on the way up”. It did not want to be late on the way down. Perhaps Bullock is being unduly modest. The central bank looks to have judged well the extent of monetary tightening. It did not raise interest rates as much as its peers, but still got inflation back to the target. <iframe id="ZIcUE" class="tc-infographic-datawrapper" style="border: 0;" src="https://datawrapper.dwcdn.net/ZIcUE/" width="100%" height="400px" frameborder="0" scrolling="no"></iframe> <h2>Unemployment remains low</h2> Last week, we got an <a href="https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/latest-release">update</a> on the strength of the labour market. Unemployment stayed at 4.1%. It has now been around 4% since late 2023, a remarkable achievement. This is below the 4.5% the Reserve Bank had <a href="https://www.rba.gov.au/speeches/2019/sp-ag-2019-06-12-2.html">regarded</a> as the level consistent with steady inflation (in economic jargon, the <a href="https://www.rba.gov.au/education/resources/explainers/nairu.html">NAIRU</a>). But neither prices nor <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/wage-price-index-australia/latest-release">wages</a> have accelerated. <iframe id="WYjUU" class="tc-infographic-datawrapper" style="border: 0;" src="https://datawrapper.dwcdn.net/WYjUU/" width="100%" height="400px" frameborder="0" scrolling="no"></iframe> <h2>Households and businesses may turn cautious</h2> In its updated <a href="https://www.rba.gov.au/publications/smp/2025/may/pdf/statement-on-monetary-policy-2025-05.pdf">forecasts</a>, the bank sees headline inflation dropping to 2.1% by mid-year but going back to 3.0% by the end of the year, as the electricity subsidies are removed. By mid-2027, it will be back near the middle of the 2-3% target. Underlying inflation is forecast to stay around the middle of the target band throughout. The Reserve Bank cut its forecast for gross domestic product (GDP) to 2.1% by December, down from its previous forecast of 2.4% made in February. It said: <blockquote> Economic policy uncertainty has increased sharply alongside recent global developments, and this is expected to prompt some households to increase their precautionary savings and some businesses to postpone some investment decisions. </blockquote> The unemployment rate is expected to increase to 4.3% by the end of the year and remain there through 2026. Cost of living pressures look set to ease, as real household disposable income grows faster than population. As the Reserve Bank governor told a media conference on Tuesday: <blockquote> There’s now a new set of challenges facing the economy, but with inflation declining and the unemployment rate relatively low, we’re well positioned to deal with them. The board remains prepared to take further action if that is required. </blockquote> <h2>Economic and policy ‘unpredictability’</h2> The main uncertainty in the global economy is how the trade war instigated by US President Donald Trump will play out. <a href="https://www.washingtonpost.com/business/2025/05/14/trump-tariffs-china-trade/">According to one count</a>, he has announced new or revised tariff policies about 50 times. “The outlook for the global economy has deteriorated since the February statement. This is due to the adverse impact on global growth from higher tariffs and widespread economic and policy unpredictability,” the bank noted. The US tariff pauses on the highest rates on China and most other nations are due to be in place for 90 days. But more measures may be announced before then. This uncertainty is likely to be stifling trade, and even more so investment decisions by companies in the face of rapidly changing policies. And it will weaken the global economy. In her <a href="https://rba.livecrowdevents.tv/MediaConferenceMonetaryPolicyDecision20May2025/stream">press conference</a>, Bullock said the board’s judgement was that “global trade developments will overall be disinflationary for Australia”. Not only is the global outlook weaker, but some goods no longer being sold to the US could be diverted to Australia. <h2>Where will interest rates go from here?</h2> The Reserve Bank’s updated <a href="https://www.rba.gov.au/publications/smp/2025/may/pdf/statement-on-monetary-policy-2025-05.pdf">forecasts</a> assume interest rates will fall further, to 3.4% by the end of the year. But this is just a reflection of what <a href="https://www.rba.gov.au/statistics/cash-rate/assumptions/index.html">financial markets are implying</a>. It is not necessarily what the bank itself expects to do. It is certainty not a promise of what they will do. But the Reserve Bank still regards its stance as “restrictive”, or weighing on growth. So if it continues to believe inflation will stay within the target band, or the global outlook deteriorates, it will cut rates further.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/256798/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> By <a href="https://theconversation.com/profiles/john-hawkins-746285">John Hawkins</a>, Senior Lecturer, Canberra School of Politics, Economics and Society, <a href="https://theconversation.com/institutions/university-of-canberra-865">University of Canberra</a> This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/rba-cuts-interest-rates-ready-to-respond-again-if-the-economy-weakens-further-256798">original article</a>. Image: Sky News </div>

Money & Banking

Aussie couple set to give away $3.5 billion

Billionaire Canva co-founder Cameron Adams and his wife Lisa Miller have pledged to give away at least half of their estimated $7 billion fortune, calling on Australia’s wealthiest to follow suit in the fight against environmental degradation. The philanthropic commitment will see the couple funnel significant resources into green initiatives via The Giving Pledge and Founders Pledge – two global efforts that encourage billionaires and entrepreneurs to donate a substantial portion of their wealth to impactful causes. “Nature nourishes us, sustains us, inspires us and shapes how we live,” Mr Adams wrote in his letter to The Giving Pledge, the global charity initiative co-founded by Warren Buffett and Bill and Melinda Gates. “But today, many of the ecosystems that support our lives are being destroyed – and our future depends on how we choose to save them.” Adams, who co-founded the homegrown tech success Canva in 2013, and Miller, a former zoologist turned entrepreneur, say their focus will be on reversing biodiversity loss and restoring natural ecosystems, which they see as critical to the survival of life on Earth. “Philanthropy is more than charity; it is a means of addressing systemic issues, driving meaningful change and ensuring that future generations inherit a world rich in possibility and biodiversity,” Mr Adams said. The couple’s wealth is largely tied up in Canva equity, with the company currently valued at around AU$49.5 billion (US$32 billion) and reportedly considering a NASDAQ listing in 2026. Canva’s other co-founders, Melanie Perkins and Cliff Obrecht, joined The Giving Pledge in 2021. The new pledge by Adams and Miller follows earlier environmental commitments by the couple, including the establishment of Wedgetail Ventures, an eco-investment fund backing conservation projects and local communities. They also own a 5000-hectare property in Tasmania, now being developed into a conservation research centre in partnership with the University of Tasmania. “In recent years, we have grown in our confidence that these are issues worth fighting for, and that we can make a unique contribution with the funds and skills that we have,” Mr Adams said. Lisa Miller echoed the sentiment in joint statements, underscoring the importance of bold, scalable efforts in the environmental space. “We must not only halt nature’s decline but also begin its restoration,” she said. Through Founders Pledge, the couple joins a growing network of tech entrepreneurs including Spotify’s Magnus Hult, Culture Amp’s Jon Williams, and Klarna’s Niklas Adalberth. The organisation has attracted over 2,000 members across 45 countries, with more than US$1.5 billion (AU$2.3 billion) already donated from pledged funds. “Entrepreneurs are uniquely placed to transform the world,” Founders Pledge states. “We advise on, facilitate and maximise the impact of our members’ giving.” The Adams-Miller announcement adds to a growing number of high-profile philanthropic moves by Australian billionaires. Mining magnate Andrew “Twiggy” Forrest and his former wife Nicola were among the first Australians to sign on to The Giving Pledge back in 2013. “As a family, we agreed many years ago to give away the majority of our wealth,” the Forrests said at the time. “We felt that if our children were to inherit considerable wealth, it would only get in the way of them striving for and achieving their best.” Adams hopes his and Miller’s decision will spark a wider cultural shift among Australia’s wealthiest. “We hope others will recognise the power of philanthropy to create lasting environmental and societal impact by joining us in this commitment,” he said. Image: Wedgetail

Money & Banking

Kochie reportedly eyeing off top job in AFL

Port Adelaide chairman David Koch is reportedly positioning himself to succeed Richard Goyder as the next AFL chairman, in a potential shake-up that could ripple through both the league and the Power’s leadership structure. According to veteran journalist Damian Barrett, Koch, who has chaired Port Adelaide since 2012, is “eyeing off” what is widely regarded as the most powerful position in Australian rules football. “David Koch, along with Ken Hinkley, has transformed this footy club from what it once was, but he is eyeing off a potential spot on the AFL Commission as well,” Barrett said on <a href="https://wwos.nine.com.au/videos/afl/david-koch-could-depart-port-for-juicy-afl-role/cmavnwl5200240hns3gw35cke" target="_blank" rel="noopener">Nine’s Footy Classified</a>. “Not just a spot on the commission, but potentially to be the chair of it.” The current AFL chairman, Richard Goyder – also the former Qantas chairman – has led the AFL since 2017, succeeding Carlton great Mike Fitzpatrick. While many within the league had expected Goyder to step down when his current term ends in early 2026, The Age reported in late 2024 that he is seeking another term, which would extend his tenure until 2028. This ambition reportedly blindsided several AFL clubs, who were under the impression a leadership transition was imminent. Goyder has served on the AFL Commission since 2011, and prominent football figures are now calling for a change. “After serving the game admirably as a commissioner since 2011 and chairman since 2017, it's simply time for Richard Goyder to pull up stumps, this year,” Brownlow Medallist Gerard Healy told SEN. “At worst, orchestrate a 12-month handover to the incoming chairman, who can get to work immediately.” Barrett suggested that Koch’s potential move to the AFL Commission – and possibly into the chairman’s seat – adds to the uncertainty surrounding Port Adelaide, especially as the club prepares for life after long-serving coach Ken Hinkley. “I raise that as part of the backdrop of instability and uncertainty at Port Adelaide as it wades through this Ken Hinkley to Josh Carr transition,” Barrett said. “You’ve got the chair of the club also unknown.” Koch, a former TV presenter best known for co-hosting Sunrise, has played a key role in Port Adelaide’s revival over the past decade. However, his possible pursuit of a league-wide role could usher in a new era of change for both club and code. Whether Goyder chooses to extend his reign or step aside for new leadership, the months ahead promise to be significant for the AFL's executive future – and Port Adelaide’s. Images: 9 Network

Money & Banking

Millions of Aussies set to receive cost-of-living pay bump

Prime Minister Anthony Albanese has thrown his government’s support behind a “fair” pay rise for Australia's lowest-paid workers, setting the stage for a potential showdown with employer groups ahead of the Fair Work Commission’s annual wage review. In a submission to the Commission, the federal government recommended a real wage increase – meaning one above the rate of inflation – for around three million Australians earning either the minimum wage or under an industry award. The push is part of Labor’s broader strategy to ease cost-of-living pressures and boost household incomes. “This will help around three million workers across the country, including cleaners, retail workers and early childhood educators,” said Treasurer Jim Chalmers and Employment Minister Amanda Rishworth in a joint statement. “Boosting wages, cutting taxes for every taxpayer and creating more jobs are central parts of our efforts to help Australians with the cost of living.” While the government did not specify an exact figure, it made clear that any increase should outpace inflation, a stance likely to be met with resistance from employers. Business groups, including the Australian Chamber of Commerce and Industry, are calling for a more modest 2.5% increase, warning that anything higher could hurt struggling businesses, especially with superannuation contributions set to rise from 11.5% to 12% on July 1. Last year, minimum wage earners received a 3.75% pay rise, lifting the national minimum wage to $24.10 per hour, or $915.90 per week. With headline inflation then at 3.6%, workers saw only a marginal real wage increase of 0.15%. However, the economic backdrop has shifted. In the year to March, overall wages grew by 3.4% while the consumer price index rose just 2.4%, indicating a real wage growth of 1% for many Australians. Inflation is now within the Reserve Bank’s target band of 2-3%, which the government says supports its call for a generous, yet “economically responsible” wage hike. “An increase in minimum and award wages is consistent with inflation sustainably remaining within the RBA's target band and will provide further relief to lower income workers who are still doing it tough,” Chalmers and Rishworth added. Since Labor took office in 2022, the minimum wage has surged by historically high margins: 5.2% in 2022 – the largest rise in 16 years – and 5.75% in 2023. In total, the minimum wage has increased by $143 per week under the Albanese government. Despite concerns from employers over weak economic growth and rising business costs, the government remains optimistic about a rebound in domestic demand. Its submission acknowledged global risks, including the potential impact of Donald Trump's trade policies, but forecast stronger growth in 2025 and 2026. Prime Minister Albanese reinforced Labor’s commitment to wage growth during a cabinet meeting this week, saying a further increase to the minimum wage would be one of his top priorities heading into the next federal election. “Labor will always stand for improving people's wages and conditions,” he declared. Still, the looming expiry of the government’s $75 quarterly electricity rebates at the end of 2025 poses a risk of reigniting inflationary pressures – something the Fair Work Commission will weigh carefully as it prepares to announce its decision in June. The outcome of the review will directly affect 180,000 workers on the national minimum wage and an additional 2.7 million on industry awards, making it a critical flashpoint in the battle over how best to balance worker welfare and economic sustainability. Images: Instagram

Money & Banking

Bill Gates set to give away his entire fortune

In a bold, legacy-defining move, the Bill and Melinda Gates Foundation had announced plans to spend more than $200 billion over the next two decades, dramatically accelerating its mission to combat global poverty and disease before closing its doors in 2045. The philanthropic giant, co-founded by Bill Gates in 2000, will double its giving in the years ahead – an effort Gates says is driven by a sense of "urgency and opportunity". With advances in artificial intelligence and public health breakthroughs on the horizon, and as government aid budgets decline worldwide, the foundation is aiming to make its final chapter the most impactful yet. "People will say a lot of things about me when I die, but I am determined that ‘he died rich’ will not be one of them," Gates, 69, wrote in a personal blog post on Thursday. “There are too many urgent problems to solve for me to hold onto resources that could be used to help people.” The decision marks a pivotal shift from the foundation’s original charter, which called for operations to end 20 years after Gates’s death. Instead, the organisation will sunset in 2045, regardless of Gates’s lifespan. The scale of the commitment is staggering: over the next 20 years, the Gates Foundation will give away more than twice what it distributed in its first 25 years. “During the first 25 years of the Gates Foundation – powered in part by the generosity of Warren Buffett – we gave away more than $100 billion,” Gates noted. Founded at the dawn of the 21st century, the Gates Foundation has become one of the most influential forces in global health. From spearheading polio eradication efforts to funding a life-saving rotavirus vaccine that has reduced child deaths from diarrhoea by 75%, its impact is undeniable. Now, the foundation’s final act aims even higher. “By accelerating our giving, my hope is we can put the world on a path to ending preventable deaths of mums and babies and lifting millions of people out of poverty,” Gates wrote. The announcement also comes at a moment of transition. In 2024, Melinda French Gates departed from the foundation, three years after the couple's divorce. Yet the shared vision remains clear: a world where fewer lives are lost to poverty, illness and neglect. As Gates prepares to give away nearly all of his $112.6 billion fortune, his message to the world is simple – and powerful: we don’t have forever to make a difference. So we must act now. Images: Instagram

Money & Banking

When can you expect to benefit from Albanese's election promises?

Following the sweeping victory for Prime Minister Anthony Albanese and the Labor Party over the weekend, Australians are now looking to the government to deliver on a suite of cost-of-living promises aimed at easing financial pressures across the country. Finance expert and Money editor Effie Zahos told the Today show that the scale of the Labor win should pave the way for campaign commitments to be swiftly translated into policy. "The strength of the government's win should make the passage from promise into law a lot easier," Zahos said. "And there were so many promises made – everything from a two-year beer tax freeze to a new 1800 Medicare line." Among the most anticipated reforms is a no-receipt $1000 tax deduction for work-related expenses, set to roll out on July 1 next financial year. Zahos described the measure as an "exciting" step in a broader tax overhaul, but she also offered a word of caution: "This is a tax deduction, not a refund. So how much you get will come down to your tax bracket. Assuming you're on a 30 per cent tax rate, your relief will be $300." The Albanese government estimates around six million Australians will benefit, with average savings of $205 per person. However, a broader income tax cut for those earning between $45,000 and $80,201 – reducing the rate from 16 per cent to 14 per cent – won't take effect until July 1, 2027. Housing and Construction Promises On the housing front, the government has committed to enabling five per cent deposits for home buyers and offering shared equity loans, starting July 1. However, Zahos noted that implementation could vary. "The shared equity one still is uncertain because they've got to be pushed out through the states as well," she said. Additional measures include the construction of 100,000 new homes and a $10,000 bonus for apprentice tradies such as bricklayers, electricians, carpenters, and plumbers living away from home. The bonus will be distributed in $2000 instalments beginning in the new financial year. Support for Students and Parents In a bid to appeal to younger voters, the government has pledged to cut 20 per cent off student HELP debts before June 1. The move is expected to reduce the average student loan by more than $5000. From January 5, 2026, parents will be entitled to three days of subsidised childcare per week – a policy that removes the activity test, meaning employment will no longer be a requirement for access. Energy Relief on the Horizon Households can also expect temporary relief on energy costs, with rebates and a 30 per cent discount on home batteries starting from July 1. But Zahos warned these benefits will expire by the end of 2025. "And then the pain will continue," she said, hinting at the ongoing challenges Australians face despite the short-term reprieve. With expectations high and timelines tight, all eyes are now on the Albanese government to turn its electoral promises into tangible support for everyday Australians. Image: ABC News

Money & Banking

Aussie bank says good news on the way for homeowners

Bendigo Bank is forecasting four interest rate cuts from the Reserve Bank of Australia (RBA), including one later this month, following the release of key inflation figures that show underlying inflation has returned to the central bank’s target range for the first time in over three years. According to Bendigo Bank’s chief economist David Robertson, the RBA is expected to pivot from its primary focus on inflation to broader economic concerns such as employment and growth. “The RBA has been dealing with global inflation shock for three years, but its concerns are quickly moving from price stability and inflation to protecting growth and jobs,” Robertson said. The RBA's preferred measure of underlying inflation, the trimmed mean, fell from 3.3% to 2.9%, marking a return to the target range of 2–3% for the first time since December 2021. Headline inflation held steady at 2.4%. Robertson said the new inflation data sets the stage for a rate cut on May 20, with the only remaining uncertainty being the size of the cut. “The next cut is almost certain for May 20, but of what magnitude?” he said, suggesting a 35 basis point reduction was more likely than a larger move. “A larger 50 basis point cut in May is most unlikely unless markets become dislocated like in the GFC.” Bendigo Bank is forecasting a total of four rate cuts, including the expected May move, bringing the cash rate down to approximately 3.1% by the end of the year. Market analysts are even more aggressive, pricing in five cuts that could take the rate to around 2.8%. Despite the improved inflation outlook, global economic headwinds remain a significant concern. Robertson pointed to ongoing market volatility driven by US President Donald Trump’s trade tariffs and uncertainty surrounding global trade flows. “Equity markets have been clawing back some of their losses but there are still difficult times ahead,” he said. “Tariffs are generally bad for everyone but especially problematic for the country imposing them.” The International Monetary Fund (IMF) has revised global growth projections in light of the economic tensions, cutting its forecast for US GDP growth from 2.7% to 1.8% and China’s from 4.6% to 4%. Australia, too, has felt the impact, with the IMF reducing its 2025 growth estimate from 2.1% to 1.6%. Bendigo Bank has adjusted its own forecast accordingly, downgrading Australia’s expected growth to 2%. With inflation easing and global pressures mounting, the RBA appears poised to shift gears from restraint to support. “The environment is changing quickly,” said Robertson. “It’s time for the RBA to support the broader economy again.” Image: Bendigo Bank

Money & Banking

Older Australians are also hurting from the housing crisis. Where are the election policies to help them?

<div class="theconversation-article-body"> It would be impossible at this stage in the election campaign to be unaware that housing is a critical, potentially vote-changing, issue. But the suite of policies being proposed by the <a href="https://theconversation.com/how-do-the-coalition-and-labor-plans-on-housing-differ-and-what-have-they-ignored-253337">major parties</a> largely focus on young, first home buyers. What is glaringly noticeable is the lack of measures to improve availability and affordability for older people. Modern older lives are diverse, yet older people have become too easily pigeonholed. No more so than in respect to property, where a perception has flourished that older people own more than their fair share of housing wealth. While the value of housing has no doubt increased, home <a href="https://www.aihw.gov.au/reports/australias-welfare/home-ownership-and-housing-tenure#:%7E:text=The%20home%20ownership%20rate%20of,compared%20with%2036%25%20in%202021.">ownership rates</a> among people reaching retirement age has actually declined since the mid-1990s. Older people can also face <a href="https://www.anglicare.asn.au/research-advocacy/rental-affordability/">rental stress and homelessness</a> – with almost 20,000 <a href="https://www.abs.gov.au/statistics/people/housing/estimating-homelessness-census/latest-release">homeless people</a> in Australia aged over 55. Severe housing stress is a key contributing to those homelessness figures. It’s easy to blame older Australians for causing, or exacerbating, the housing crisis. But doing so ignores the fact that right now, our housing system is badly failing many older people too. <h2>No age limits</h2> Owning a home has traditionally provided financial security for retirees, especially ones relying on the age pension. This is so much so, that home ownership is sometimes described as the “fourth pillar” of Australia’s retirement system. But housing has become more expensive – to rent or buy – for everyone. Falling rates of <a href="https://grattan.edu.au/report/money-in-retirement/">home ownership</a> combined with carriage of mortgage debt into retirement, restricted access to shrinking stocks of social housing, and lack of housing affordability in the private rental market have a particular impact on older people. <h2>Housing rethink</h2> Housing policy for older Australians has mostly focused on age-specific options, such as retirement villages and aged care. Taking such a limited view excludes other potential solutions from across the broader housing system that should be considered. Furthermore, not all older people want to live in a retirement village, and fewer than <a href="https://www.abs.gov.au/statistics/health/disability/disability-ageing-and-carers-australia-summary-findings/latest-release#:%7E:text=5.5%20million%20Australians%20(21.4%25),a%20profound%20or%20severe%20disability.">5% of older people</a> live in residential aged care. During my <a href="https://www.churchilltrust.com.au/fellow/victoria-cornell-sa-2019/">Churchill Fellowship study</a> exploring alternative, affordable models of housing for older people, I discovered three cultural themes that are stopping us from having a productive conversation about housing for older people. <ul> <li> Australia’s tradition of home ownership undervalues renting and treats housing as a commodity, not a basic need. This disadvantages older renters and those on low income. </li> <li> There’s a stigma regarding welfare in Australia, which influences who is seen as “deserving” and shapes the policy responses. </li> <li> While widely encouraged, “ageing-in-place” means different things to different people. It can include formal facilities or the family home that needs modifications to make it habitable as someone ages. </li> </ul> These themes are firmly entrenched, often driven by policy narratives such as the primacy of home ownership over renting. In the past 50 years or so, many have come to view welfare, such as social housing, as a <a href="https://www.ahuri.edu.au/research/final-reports/390">last resort</a>, and have aimed to age in their family home or move into a “desirable” retirement village. <h2>Variety is key</h2> A more flexible approach could deliver housing for older Australians that is more varied in design, cost and investment models. The promises made so far by political parties to help younger home buyers are welcome. However, the housing system is a complex beast and there is no single quick fix solution. First and foremost, a national housing and homelessness plan is required, which also involves the states and territories. The plan must include explicit consideration of housing options for older people. Funding for housing developments needs to be more flexible in terms of public-private sector investment and direct government assistance that goes beyond first home buyer incentives. <h2>International models</h2> For inspiration, we could look to Denmark, which has developed numerous <a href="https://www.spatialagency.net/database/co-housing">co-housing communities</a>. Co-housing models generally involve self-managing communities where residents have their own private, self-contained home, supported by communal facilities and spaces. They can be developed and designed by the owner or by a social housing provider. They can be age-specific or multi-generational. Funding flexibility, planning and design are key to their success. Institutional investors include <ul> <li> so-called impact investors, who seek social returns and often accept lower financial returns </li> <li> community housing providers </li> <li> member-based organisations, such as mutuals and co-operatives. </li> </ul> Government also plays a part by expediting the development process and providing new pathways to more affordable ownership and rental options. Europe is also leading the way on social housing, where cultural attitudes are different from here. In Vienna, Austria, more than 60% of residents live in 440,000 <a href="https://www.wienerwohnen.at/wiener-gemeindebau/municipal-housing-in-vienna.html">socially provided homes</a>. These homes are available for a person’s entire life, with appropriate age-related modifications permitted if required. At over 20% of the total housing stock, <a href="https://lbf.dk/om-lbf/english-the-danish-social-housing-model/">social housing</a> is also a large sector in Denmark, where the state and municipalities support the construction of non-profit housing. <h2>Overcoming stereotyes</h2> Our population is ageing rapidly, and more older people are now renting or facing housing insecurity. If policymakers continue to ignore their housing needs, even more older people will be at risk of living on the street, and as a result will suffer poor health and social isolation. Overcoming stereotypes - such as the idea that all older people are wealthy homeowners - is key to building fairer, more inclusive solutions. This isn’t just about older Australians. It’s about creating a housing system that works for everyone, at every stage of life.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/255391/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> By <a href="https://theconversation.com/profiles/victoria-cornell-2372746">Victoria Cornell</a>, Research Fellow, <a href="https://theconversation.com/institutions/flinders-university-972">Flinders University</a> This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/older-australians-are-also-hurting-from-the-housing-crisis-where-are-the-election-policies-to-help-them-255391">original article</a>. Image: Shutterstock </div>

Money & Banking

What every parent should read before becoming the bank of mum and dad

In late 2023, economists Jarden estimated <a style="color: #467886;" href="https://www.afr.com/companies/financial-services/the-bank-of-mum-and-dad-is-good-for-70-000-new-analysis-concludes-20231129-p5enpp">15 per cent of mortgage borrowers received some form of financial support</a> from their parents. A separate poll by comparison site Finder around the same time <a style="color: #467886;" href="https://au.finance.yahoo.com/news/first-home-buyers-reveal-huge-amount-aussie-parents-gifted-them-201221909.html">put the figure at 11 per cent</a>. Fast forward to February this year, with a UBS survey <a style="color: #467886;" href="https://www.abc.net.au/news/2025-02-06/cost-of-living-sting-lessened-by-bank-of-mum-and-dad/104882754">suggesting almost half of first home buyers receive parental assistance</a>. Clearly, the Bank of Mum and Dad is a rapidly growing source of funds for younger people seeking to purchase property. However, some older Australians are now paying a hefty price for having done so without adequate planning and protections. On the hook Amid the excitement of homebuying, many parents overlook the fact they could be left on the hook to cover any shortfall. The worst-case scenario here is losing your own home, as well as your child losing theirs, if you went guarantor on their loan and they defaulted and you didn’t have a backup plan. If you loaned them money which they subsequently can’t repay, the principal amount goes unrepaid and you also miss out on the interest/compound growth that money could have earned if invested elsewhere. You may even be asked to fork out more in future if your child needs help to keep the property or to subsequently buy a replacement property. Unlike for a real bank, there is no public bailout for the Bank of Mum and Dad. Financial shortfall A common problem that I and other financial advisors are now seeing is parents inadvertently giving their children more than they can actually afford. Take people who acted as Bank of Mum and Dad before the pandemic hit. They budgeted how much they would need for retirement and then gave their adult kids money towards buying a home of their own. Then COVID-19 arrived. Countless jobs were lost and businesses shuttered. Many would-be retirees were forced to stay in the workforce for longer than planned. Next came the inflation crisis, with mortgages and living costs soaring. Retirement budgets blew-out as more money was suddenly needed for everyday expenses, particularly energy, insurance and food. Meanwhile ballooning house prices over the pandemic years saw first homebuyers needing even larger deposits. That all translated to significant financial shortfalls for the Bank of Mum and Dad. Elder abuse <a style="color: #467886;" href="https://www.aihw.gov.au/family-domestic-and-sexual-violence/population-groups/older-people#abuse">Government figures from 2023</a> estimate one in six older Australians suffer elder abuse in some form, with 2.1 per cent experiencing financial abuse – undue control, pressure or restricted access to their own money and financial decisions. Half (53 per cent) of elder abuse perpetrators are family members, with adult children the most common offenders. Given the amount of money involved in property purchases, and the stresses associated with housing affordability, the potential for the Bank of Mum and Dad to suffer elder abuse is alarmingly high. Relationship breakdowns Money is perhaps the greatest source of tension in relationships. Usually that is between partners, yet these can multiply for the Bank of Mum and Dad and its stakeholders. Some examples include: <ul> <li>You and your partner disagree on what or how much assistance to provide.</li> <li>Your other children feel disadvantaged if they don’t receive the same financial assistance.</li> <li>Having provided the finances, you then interfere in how your child manages the property or their general finances, causing resentment to build.</li> <li>A marriage breakdown (yours or your child’s) affects the repayment of a loan or the nature of a mortgage guarantee.</li> </ul> Protect yourself While supporting children is the foremost concern of the Bank of Mum and Dad, it is important to protect yourself too. A written agreement outlining the nature of the support, conditions and contingencies is crucial to keep every aligned. Independent advice from your financial adviser, lawyer, mortgage broker and accountant ensures you fully understand what you are on the hook for, how much you can afford to contribute, and whether there are less-risky options. Finally, be sure that the decision to support your child’s property ambitions is your own and that you aren’t coerced into it. If you’re concerned that you may be experiencing elder abuse, call the free <a style="color: #467886;" href="https://www.health.gov.au/contacts/elder-abuse-phone-line">elder abuse line on 1800 353 374</a>. Helen Baker is a licensed Australian financial adviser and author of the new book, Money For Life: How to build financial security from firm foundations (Major Street Publishing $32.99). Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a style="color: #467886;" title="http://www.onyourowntwofeet.com.au/" href="http://www.onyourowntwofeet.com.au/">www.onyourowntwofeet.com.au</a> Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754. Image: Shutterstock

Money & Banking

Australia has the highest gambling losses in the world. Is it time for mandatory limits?

<div class="theconversation-article-body">Gambling prevalence studies provide a snapshot of gambling behaviour, problems and harm in our communities. They are typically conducted about every five years. In some Australian states and territories, four or five have been conducted over the past 20 or so years. These have provided a snapshot into how gambling has changed – and how it has not. So, how has gambling in Australia changed in the past two decades or so, and where may we be heading? <blockquote class="twitter-tweet"> Australia has the highest gambling losses in the world. Australia should: 🚫 Ban gambling ads 🎰 Introduce loss limits on pokies and online gambling 📉 Progressively cut the number of pokies in each state Our new report shows how governments should prevent gambling harm.… <a href="https://t.co/7U3IgzOLSp">pic.twitter.com/7U3IgzOLSp</a> — Grattan Institute (@GrattanInst) <a href="https://twitter.com/GrattanInst/status/1831297414080176469?ref_src=twsrc%5Etfw">September 4, 2024</a></blockquote> <h2>The intensification of gambling</h2> In 1997-98, the Productivity Commission found <a href="https://www.pc.gov.au/inquiries/completed/gambling/report/summary.pdf">about 82% of Australians</a> had gambled in the previous 12 months. Almost all further prevalence studies show the proportion of adults gambling has declined substantially over time. The <a href="https://www.gambleaware.nsw.gov.au/resources-and-education/check-out-our-research/published-research/nsw-gambling-survey-2024">2024 NSW prevalence survey</a>, for example, found 54% reported gambling in the previous 12 months, down from 69% in 2006. While fewer people are gambling, the proportion of people experiencing problems has not changed much, <a href="https://www.qgso.qld.gov.au/statistics/theme/society/gambling/australian-gambling-statistics">nor has gambling turnover</a>. In some states, gambling turnover has increased, even when you take inflation into account. So while a smaller proportion of people are gambling, those who do gamble are doing so more frequently, and spend more money – a phenomenon we have described as the “intensification” of the industry. As figures from the Grattan Institute show, the vast majority of gambling spend comes from a very small proportion of people who gamble. <iframe id="Z6EYJ" class="tc-infographic-datawrapper" style="border: 0;" src="https://datawrapper.dwcdn.net/Z6EYJ/" width="100%" height="400px" frameborder="0" scrolling="no"></iframe> <h2>What’s the problem?</h2> Typically, the focus in gambling studies has been on “problem gamblers”, a term we now avoid because it can be stigmatising. This refers to those experiencing severe problems due to their gambling, which is typically <a href="https://www.justice.vic.gov.au/justice-system/safer-communities/gambling/victorian-population-gambling-and-health-study-2023">about 1% of the adult population</a>, and around 2% of people who gamble. This doesn’t sound like much, until you remember 1% of adults in Australia is more than 200,000 people. That’s a lot of people struggling with severe problems. Based on recent prevalence surveys in Australia, these gamblers spend <a href="https://www.gambleaware.nsw.gov.au/resources-and-education/check-out-our-research/published-research/nsw-gambling-survey-2024">about 60 times as much</a> as people who do not experience problems. However, that’s just the most severe cases. <h2>How gambling harms people</h2> When most people think of gambling harm, they think about financial harm. But gambling can cause problems with relationships, work and study, emotional and psychological harm, and <a href="https://bmcpublichealth.biomedcentral.com/articles/10.1186/s12889-016-2747-0">even cause health issues</a>. Some degree of gambling harm is experienced by <a href="https://www.gambleaware.nsw.gov.au/resources-and-education/check-out-our-research/published-research/nsw-gambling-survey-2024">around 10-15%</a> of people who gamble. Some groups are overrepresented: young men typically experience very high levels of harm compared to others. Other overrepresented groups are: <ul> <li>those who have not completed tertiary education</li> <li>people who speak a language other than English</li> <li>people who identify as Aboriginal or Torres Strait Islander.</li> </ul> Harm isn’t just experienced by people who gamble, though – it impacts the people around them. While young men are more likely to experience harm from their own gambling, <a href="https://www.gambleaware.nsw.gov.au/resources-and-education/check-out-our-research/published-research/nsw-gambling-survey-2024">women, particularly young women</a>, are most likely to experience harm from someone else’s gambling. When we take all of these sources of harm into account, we get a much better picture of gambling harm in our community: <a href="https://www.gambleaware.nsw.gov.au/resources-and-education/check-out-our-research/published-research/nsw-gambling-survey-2024">around 15-20% of all adults</a> (not all gamblers) experience harm. That’s very different to the figure of 1% we’ve focused on in the past. We’re still missing some accounting, though: we don’t know how much harm is experienced by people under 18, for example, because prevalence studies typically only include adults. <h2>Where does the harm come from?</h2> The most problematic form in Australia is pokies, responsible for <a href="https://pmc.ncbi.nlm.nih.gov/articles/PMC10260219/#:%7E:text=EGMs%20are%20responsible%20for%2051,problems%20due%20to%20low%20participation.">about 51-57% of problems</a>. Casinos are responsible for <a href="https://ftp.justice.vic.gov.au/justice-system/safer-communities/gambling/victorian-population-gambling-and-health-study-2023">another 10-14%</a>, although fewer people have been gambling in casino games in recent years. Sports betting and race betting together account for about another 19-20% of harm. Between them, pokies, casino games and sports and race betting account for about 90% of harm to Australian gamblers. <iframe id="w2wEY" class="tc-infographic-datawrapper" style="border: 0;" src="https://datawrapper.dwcdn.net/w2wEY/" width="100%" height="400px" frameborder="0" scrolling="no"></iframe> <h2>Availability is an issue</h2> This widespread availability of pokies is the biggest single driver behind gambling harm in Australia. <iframe id="hIgeD" class="tc-infographic-datawrapper" style="border: 0;" src="https://datawrapper.dwcdn.net/hIgeD/" width="100%" height="400px" frameborder="0" scrolling="no"></iframe> In other countries, pokies are limited to venues that are specifically used for gambling, like casinos or betting shops. We have pokies in a huge number of our pubs and clubs, except in Western Australia. A couple of years ago, we used national prevalence data to compare gambling problems in WA <a href="https://akjournals.com/view/journals/2006/12/3/article-p721.xml">to the rest of the country</a>. A higher percentage of adults in WA gamble, but mostly on the lotteries which are typically <a href="https://theconversation.com/pokies-lotto-sports-betting-which-forms-of-problem-gambling-affect-australians-the-most-240665">not associated with much harm</a>. Gambling on pokies is far less prevalent in WA because they’re only available in one casino. Gambling problems and harm are about one-third lower in WA, and our analysis shows this can be attributed to the limited access to pokies. This also tells us something important. If pokies are not available, people will typically not substitute them with other harmful forms. It points to the role of the availability of dangerous gambling products in gambling harm, rather than personal characteristics. Online gambling has also become a lot more available. Most of us now have a mobile phone almost surgically implanted onto our hand, making online gambling more accessible than ever. Not surprisingly, <a href="https://www.gamblingresearch.org.au/publications/second-national-study-interactive-gambling-australia-2019-20">online gambling continues to increase</a>. <h2>An obvious solution to try</h2> Governments have taken increasingly proactive measures to help address gambling harm, such as the <a href="https://www.dss.gov.au/gambling/resource/national-consumer-protection-framework-online-wagering-national-policy-statement">National Consumer Protection Framework for Online Gambling</a>, strategies for minimising harm such as NSW’s investment into <a href="https://www.nsw.gov.au/media-releases/gambleaware-week-0">gambling harm minimisation</a>, Victoria’s <a href="https://www.theguardian.com/australia-news/2024/nov/26/victoria-pokies-changes-limits-new-laws">proposed reforms on pokies</a> including mandatory precommitment limits, Queensland’s <a href="https://www.publications.qld.gov.au/dataset/gambling-harm-min/resource/84d444db-97e0-4be0-8e87-0c6f0cb412d6">Gambling Harm Minimisation Plan</a> and the ACT’s <a href="https://www.gamblingandracing.act.gov.au/__data/assets/pdf_file/0009/1436580/Strategy-for-gambling-harm-prevention.pdf">Strategy for Gambling Harm Prevention</a>. Voluntary limits have been trialled to help people keep their gambling under control, but have had <a href="https://www.abc.net.au/news/2024-12-03/nsw-government-cashless-gaming-trial-findings-released/104679384">virtually no uptake</a>. For example, the recent <a href="https://www.liquorandgaming.nsw.gov.au/__data/assets/pdf_file/0018/1340136/evaluation-of-the-nsw-digital-gaming-wallet-trial-2024.pdf">NSW Digital Gaming Wallet trial</a> was conducted in 14 venues. Only 32 people were active users, and 14 of these were deemed genuine users. <a href="https://www.adelaide.edu.au/saces/ua/media/652/evaluation-of-yourplay-final-report_0.pdf">Another study</a> found only 0.01% of all money put through machines in Victoria used the voluntary YourPlay scheme. The problem with voluntary limits is, no one volunteers. Mandatory limits though are almost certainly necessary, just like we have mandatory limits for how fast you can drive, or how much you can drink before the bartender puts you in a taxi. There will almost certainly be push back against this, just like the introduction of mandatory seatbelts in the 1970s, or <a href="https://www.abc.net.au/news/2023-10-04/road-safety-history-australia-toll-increase/102903364">the introduction of random breath testing</a>. Now, we accept them as important public health measures. History tells us the same will happen with mandatory gambling limits, even if we’re a bit uncomfortable about it at first.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/252389/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> By <a href="https://theconversation.com/profiles/alex-russell-133860">Alex Russell</a>, Principal Research Fellow, <a href="https://theconversation.com/institutions/cquniversity-australia-2140">CQUniversity Australia</a>; <a href="https://theconversation.com/profiles/matthew-browne-97705">Matthew Browne</a>, Senior Lecturer in Statistics, <a href="https://theconversation.com/institutions/cquniversity-australia-2140">CQUniversity Australia</a>, and <a href="https://theconversation.com/profiles/matthew-rockloff-569">Matthew Rockloff</a>, Head, Experimental Gambling Research Lab, <a href="https://theconversation.com/institutions/cquniversity-australia-2140">CQUniversity Australia</a> This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/gambling-in-australia-how-bad-is-the-problem-who-gets-harmed-most-and-where-may-we-be-heading-252389">original article</a>. Image: Shutterstock </div>

Money & Banking

Stunning prediction for Aussie homeowners in wake of Trump's trade war

Australian homeowners could see their mortgage repayments tumble by as much as $9,000 annually if Donald Trump’s escalating trade war triggers a global recession, with experts predicting a double interest rate cut as soon as May. As stock markets worldwide reel from the fallout of Trump’s latest trade moves – with China now deeply involved – fears of a US recession are intensifying. On Monday alone, around $100 billion was wiped from the Australian share market amid growing global trade tensions. Yet, for Australian mortgage holders, there could be a surprising silver lining. According to ANZ, homeowners with a $600,000 loan could save between $76 and $156 a month under four forecasted rate cuts of 0.25 per cent each over the next year. For those with a $500,000 mortgage, repayments could fall by about $76 a month, while families with larger $1 million loans could pocket savings of around $153 monthly – amounting to a staggering $9,000 annually. ANZ’s chief economist, Richard Yetsenga, said the Reserve Bank of Australia (RBA) is expected to cut rates in May, July and August. “We now expect the RBA to ease in May, July, and August – 25 basis points at each meeting,” Yetsenga said, adding that a double rate cut of 50 basis points in May is not off the table if global growth deteriorates further. Earlier this year, the RBA trimmed the cash rate by 25 basis points in February, offering homeowners with variable rate loans some relief – saving them around $100 to $150 a month, or potentially more than $1,200 annually. In a stunning prediction, Treasurer Jim Chalmers echoed these forecasts while hinting at up to four interest rate cuts this year, with the potential for a significant 50 basis point cut as early as next month. “The next Reserve Bank interest rate cut in May might be as big as 50 basis points,” Chalmers said. “Forecasting is difficult enough in stable times, but even more so in uncertain times.” Despite the grim outlook for markets, Chalmers offered reassurance, especially for Australians nearing retirement whose superannuation balances are being rocked by market volatility. “Everyone with a super fund, everyone with shares, probably every Australian, is watching the global markets with trepidation,” Chalmers said. “But we are better placed, better prepared, and Australians should take comfort in that.” The Treasurer also voiced concerns about the impact of the trade war on Asia, noting that tariffs are hitting countries like Malaysia, Thailand and Vietnam particularly hard, while China’s economy may prove more resilient. ANZ expects Asian currencies to take the brunt of the adjustment as the tariffs unfold. While uncertainties loom large, for Aussie homeowners at least, the prospect of falling interest rates offers some financial relief in an increasingly unpredictable global economy. Images: Youtube

Money & Banking

Financial markets are tanking. Here’s why it’s best not to panic

<div class="theconversation-article-body"> Financial markets around the world have been slammed by the Trump adminstration’s sweeping tariffs on its trading partners, and China’s swift retaliation. Share markets have posted their biggest declines since the COVID pandemic hit in 2020, as fears of US recession surged. Iron ore, copper, oil, gold and the Australian dollar have all tumbled. On Wall Street, <a href="https://www.reuters.com/markets/sp-500-loses-24-trillion-market-value-biggest-one-day-loss-since-2020-2025-04-03/">leading indices</a> have fallen around 10% since the tariffs were announced, while the tech-heavy Nasdaq is down 20% from its recent peak. European and Asian markets have also slumped. In Australia, the key S&P/ASX 200 slid another 4.2% on Monday to levels last seen in December 2023, taking its three-day losses since the announcement to more than 7%. <hr /> <iframe id="AJ2rZ" class="tc-infographic-datawrapper" style="border: 0;" src="https://datawrapper.dwcdn.net/AJ2rZ/" width="100%" height="400px" frameborder="0" scrolling="no"></iframe> <hr /> <h2>Why are markets reacting so badly?</h2> Financial markets reacted so negatively because the tariffs were much larger than expected. They represent the <a href="https://www.abc.net.au/news/2025-04-05/trump-tariffs-upend-80-year-old-world-economic-order/105139464">biggest upheaval</a> in global trade in 80 years. Many traders were hoping the tariffs would be used mainly as a bargaining tool. <a href="https://finance.yahoo.com/news/live/trump-tariffs-live-updates-trump-digs-in-says-markets-may-have-to-take-medicine-as-stock-futures-plunge-191201959.html">But comments</a> by US President Donald Trump that markets may need to “take medicine” seem to suggest otherwise. The tariffs are expected to weaken economic growth in the US as consumers pare back spending on more expensive imports, while businesses shelve investment plans. Leading US bank JP Morgan has put the <a href="https://www.reuters.com/markets/jpmorgan-lifts-global-recession-odds-60-us-tariffs-stoke-fears-2025-04-04/">chance of a US recession</a> as high as 60%. This comes at a time when the US economy was already looking fragile. The highly regarded GDPNow model developed by the <a href="https://www.atlantafed.org/cqer/research/gdpnow">Atlanta Federal Reserve Bank</a> indicates US March quarter GDP will fall 2.8%, and that was before the tariff announcement. <h2>Worries about global growth</h2> Fears of a recession in the United States and the potential for a global downturn has led to a broad sell-off in commodity prices, including iron ore, copper and oil. Further, the Australian dollar, which is seen as a barometer for risk, has <a href="https://wise.com/au/currency-converter/currencies/aud-australian-dollar">fallen below 60 US cents</a> in local trading – its lowest level since 2009. While the direct impact of tariffs on Australia is expected to be modest (with around 6% of our exports going to US), the indirect impact could be substantial. China, Japan and South Korea together take more than 50% of Australia’s exports, and all have been hit with significantly higher tariffs. Treasurer Jim Chalmers said on Monday that the direct impact on the Australian economy would be “<a href="https://www.abc.net.au/news/2025-04-07/asx-markets-business-news-live-updates/105144276">manageable</a>”. The full effect on Australia will depend on how other countries respond, and whether we can redirect trade to other markets. The rapid decline in the Australian dollar will help offset some of the negative effects associated with a global downturn and the fall in commodity prices. We can also expect some interest-rate relief. Economists are now predicting <a href="https://www.afr.com/markets/debt-markets/traders-expect-up-to-five-rba-rate-cuts-amid-market-turmoil-this-year-20250407-p5lpo0">three further interest rate cuts</a> by the Reserve Bank, starting in May. This brings economists into line with financial market forecasts. <h2>Hang in there, markets will recover</h2> Watching equity markets tumble so dramatically can be unsettling for any investor. However, it is important to note that equity markets have experienced many downturns over the past 125 years due to wars, pandemics, financial crises and recessions. But these market impacts have generally been temporary. <hr /> <iframe id="lsNFF" class="tc-infographic-datawrapper" style="border: 0;" src="https://datawrapper.dwcdn.net/lsNFF/" width="100%" height="400px" frameborder="0" scrolling="no"></iframe> <hr /> History suggests that over the long term, equity prices continue to rise, supported by growing economies and rising incomes. The key thing for investors to remember is to not panic. Now is not the time to decide to switch your superannuation or other investments to cash. This risks missing the next upswing while also crystallising any current losses. For example, despite the steep market sell-off in March 2020 as the first COVID lockdowns came into effect, the Australian share market had completely recovered those losses by June 2021. It is good practice for investors to regularly reassess their risk profile to make sure it is right for their current stage of life. This means reducing the allocation to riskier assets as investors get closer to retirement age, while also maintaining a cash buffer to avoid having to sell assets during more turbulent periods such as now. <h2>Super funds are exposed to global risks</h2> The current sell-off has highlighted a potential issue facing the superannuation industry. So much of our superannuation is now invested in global equity markets, mostly in the US, because Australia’s <a href="https://www.abc.net.au/news/2025-04-02/australia-superannuation-retirement-savings/105098840">superannuation savings pool</a> – at more than A$4 trillion – has outgrown the investment opportunities available in Australia. Another issue facing the superannuation industry is the growth of cyber attacks, with several funds <a href="https://theconversation.com/hackers-have-hit-major-super-funds-a-cyber-expert-explains-how-to-stop-it-happening-again-253835">targeted in a recent attack</a>. Given the massive size of the assets held by some funds, it would seem they need to improve their security to be on par with that of the banking system.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/253929/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> By <a href="https://theconversation.com/profiles/luke-hartigan-1491669">Luke Hartigan</a>, Lecturer in Economics, <a href="https://theconversation.com/institutions/university-of-sydney-841">University of Sydney</a> This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/financial-markets-are-tanking-heres-why-its-best-not-to-panic-253929">original article</a>. Image: Shutterstock </div>

Money & Banking

Refinancing your home later in life – what you need to know

There are many reasons why you may look to refinance your home. The obvious one is to lower mortgage repayments with a better rate. However, other reasons people refinance later in life include: <ul> <li>unlocking equity to invest</li> <li>paying down other debts</li> <li>buying a holiday home</li> <li>funding extended travel</li> <li>launching a new business</li> <li>supporting children with a property deposit</li> </ul> Regardless of why you want to refinance, the points below will help you navigate your options. Changing lenders It may have been a while since you last revisited your mortgage, meaning you may not be aware of current lending options and traps. A common trick lenders use is the so-called “headline rate” to grab your attention. However, this interest rate is typically not what you end up paying. It may only be an introductory rate for the first few months, or hefty fees attached may wipe out any savings. Banks aren’t the only ones offering loans nowadays. Registered non-bank lenders, fintechs and online lenders can refinance your mortgage and provide other credit services the same as any bank; they just don’t take cash deposits. Alternatively, you could explore credit unions and mutual societies. Also consider any shareholder benefits you may have. Most banks have done away with them now but may still honour pre-existing ones. If you change lenders, you could lose this entitlement – permanently. Reverse mortgages Generally, only available to people aged 60-plus, a reverse mortgage effectively allows you to unlock equity in your home without you needing to make immediate repayments. However, they often have strict conditions including: <ul> <li>minimum borrowing amounts</li> <li>maximum borrowing ratios</li> <li>higher interest rates than standard mortgages</li> </ul> Crucially, the interest accrues over time and is repaid when you sell, move or pass away. As such, your debt liability grows over time – potentially impacting your future living arrangements and how much is left for beneficiaries in your will. The Govt has the “loan equity scheme” as another option to lenders. I just want to highlight the need to be careful with reverse mortgages. Changing homes Rather than selling, downsizing could involve making an investment property your primary residence and then renting out your existing home. This approach may require you to refinance both loans simultaneously. There will also be tax considerations to work through – including Capital Gains Tax liabilities when you do sell, negative gearing, depreciation, and changes to your income tax. Then there are the lifestyle factors to weigh up, especially if you are moving to a different area: <ul> <li>living expenses</li> <li>insurance and travel costs</li> <li>access to healthcare</li> <li>rental income</li> <li>property management expenses</li> </ul> Remember that if you have a Self Managed Super Fund (SMSF), it CANNOT own any property that you directly use yourself, including your home. Becoming Bank of Mum and Dad Refinancing can unlock equity to support adult children with their first property deposit. However, it isn’t without its risks. Ask yourself honestly: <ul> <li>Will this be a gift or loan?</li> <li>If a loan, under what terms? Will interest be applied? How and when will repayments be made? What if they default?</li> <li>What happens if their relationship breaks down, will you get your money back?</li> <li>How does going without that money affect your retirement?</li> <li>Do you have alternative assets to support you if your circumstances change?</li> <li>How does this affect inheritances or deposit contributions to your other children?</li> <li>Can you assist them another way without using your home equity?</li> </ul> Draw up a written agreement outlining all conditions and scenarios to avoid disagreements in the future. Pension impacts Don’t overlook how refinancing your home could impact your pension. While your home is exempt from the means test, any income or assets you generate from unlocking equity is not. You could inadvertently see your pension amount reduced or your eligibility voided altogether. This would come as a nasty shock if you haven’t pre-budgeted for such a change! Getting advice To ensure you get the best bang for your buck when refinancing, be sure to enlist the help of a good: <ul> <li>mortgage broker to source the best loans for your circumstances</li> <li>insurance broker to ensure your cover is right sized for your needs, risk and budget</li> <li>accountant to work through any tax implications</li> <li>estate planner to manage any changes</li> <li>financial adviser to keep your investments and financial strategy working for you</li> </ul> Ultimately, decisions – including about refinancing – are only as good the information you have at hand. So, make sure you have all the relevant facts before signing on the dotted line. Helen Baker is a licensed Australian financial adviser and author of the new book, Money For Life: How to build financial security from firm foundations (Major Street Publishing $32.99). Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a style="color: #467886;" title="http://www.onyourowntwofeet.com.au/" href="http://www.onyourowntwofeet.com.au/">www.onyourowntwofeet.com.au</a> Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754.

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