Overall economic trends can be a difficult thing to predict, especially given how complex they are and how many factors can be of influence. Things such as wages, interest rates, inflation, and Government activity can all impact economic trends, and that’s just the tip of the iceberg.
That doesn’t include major global disruptions, such as the COVID-19 pandemic, which quickly became the centre of most conversations around the world. People didn’t know what to expect, and now that we’re in the thick of it, experts are still unable to predict what could happen to the world’s finances.
For instance, few people would have predicted personal equity going up during a global pandemic. However, despite unemployment rates climbing in the early days and many people staying home, that’s exactly what has happened. With fewer people out and about and willing to spend their cash for fear of what could come next, savings are going up in many nations around the world.
Unexpected changes such as these show why it’s so important to prepare yourself financially when it comes to your home loan. Just as unexpectedly as interest rates can drop, they can also rise, too. If that happens, you don’t want to be in a position where you can’t afford to meet required repayments on your mortgage.
Thankfully, lenders and banks apply a buffer when they are estimating home loan repayments, which means they assess whether you could afford to make higher repayments if interest rates were to rise during the life of your loan. But this is only a buffer, and the reality is that rates are largely unpredictable and can go beyond what buffer was used when you initially applied for a loan.
In instances such as these, Compare the Market can be a useful reference. Our Home Loan Specialists are available to help you look for a home loan that suits your circumstances. In some cases, you could be in a position to find a home loan with a more enticing offer than one you are on currently, and we make the switch for Australian homeowners seamless.
However, we know that interest rates and personal financial situations don’t only fluctuate in the confines of our country. That’s why as experts in home loans, we wanted to know if the pandemic made a significant difference in household wealth in other nations, too.
In order to do that, we first need to understand what net wealth (or net worth) is. According to the Organisation for Economic Co-operation and Development (OECD), a household’s financial net worth consists of their total financial assets minus their financial liabilities. Financial assets include the things that a household owns, like equity and investment shares, while liabilities are those things they owe (e.g. loans).
Using the Household net worth statistics indicator on the OECD Data website, we took a deeper look into how the net worth of households in 20 countries has changed over the last five years, particularly between 2019 and 2020. Here’s what we found.