The Fair Work Commission (FWC) recently unveiled a 5.75% increase in award minimum wages and a new national minimum wage of $23.23 per hour (up from $21.28 per hour), starting from 1 July 2023.
This news is a welcome change for low-paid workers who have been grappling with the challenges of rising inflation. The minimum wage increase and award increase will provide a much-needed boost to their incomes, but how will this affect you?
Our Experts Say
KC comments, “While any increase puts people in a better position, this increase might not necessarily be a big factor in helping people get into the property market. There are many variables to look at. It might be a small increase for an individual worker, but for businesses with many workers, their cost increases, so they might look into decreasing the staff numbers or reducing the hours of work, so there is a risk of losing work, as businesses might cut staff or reduce workers’ hours due to inflation, which does not help. Similarly, due to high inflation, individuals have many other outflows that have increased recently, such as rent, groceries and so on. So, it’s not just about the salary or wage but about the borrowing capacity, which takes into consideration disposable income, savings, expenses and so on. People’s position might not have improved much, despite the increase, due to inflation and house prices. So, while it helps a bit, it would not be a significant driver to help people buy homes.”
Than comments, “A $1.85 increase in the minimum wage on a 38-hour work week equates to an increase of $70.30 per week. With high inflation and the high cost of living, I don’t think this increase will have any positive impact on people’s ability to buy a house.”
“Inflation is 6%, and wage growth of 5.75% means negative real wage growth. Also, those on minimum wage already find it hard to survive under high cost-of-living pressure; hence, buying a home is not something on their agenda.”
“However, this wage growth will have a huge financial impact on small and medium-sized businesses. They are going through a challenging time with people cutting back on spending to reduce business income. It is not viable to run a business anymore. Many will run out of business soon, increasing unemployment and leading to recession.”
Than highlights that if wages are not growing at a rate higher than inflation, there may be a decline in purchasing power for individuals, limiting their ability to save for a deposit or afford a mortgage.
Make A Wage Increase Work For You
A wage increase can provide a much-needed financial boost. Here’s how you can take proactive steps to make the most of any raise:
- Financial planning: Engage in financial planning to allocate the wage increase wisely. Creating a budget, setting savings goals, and managing expenses can stretch the impact of the increase further.
- Retirement savings: Contribute more to retirement savings or a superannuation fund to secure a comfortable future beyond the working years.
- Pay down debt: If you have debt, such as a credit-card balance or student loans, you can use your wage increase to pay it down faster. This will save you money on interest payments in the long run.
- Invest in skills: Consider investing in professional development and upskilling to enhance career prospects and increase future earning potential.
- Invest your money: If you are comfortable with investing, you can consider using your wage increase to invest in stocks, bonds or other financial products. This can help you grow your wealth over time.
Can I Get A Home Loan With Low Income?
Home loans with low income are possible! Our mortgage brokers will assist you in
- Calculating your new borrowing capacity to see how much you can afford to borrow and provide insights into what type of property you can afford.
- Exploring low-deposit home loan options and finding the best ones for you.
- Exploring government schemes and grants that may be available to you.
- Expediting pre-approval. Knowing your borrowing capacity will allow you to confidently explore properties within your budget, putting you ahead of the competition in the competitive property market.
- Providing educational resources and guidance on the home-buying process. From property inspections to settlement procedures, we’ll equip you with the knowledge to navigate the process with ease.
Discover your low-income home loan options now! Call us at 1300 889 743 or complete our free online assessment form, and we’ll get back to you!