Unused subscriptions could be slashing the borrowing power of millions of Aussies, according to new research from Finder.
Despite high inflation and several rate hikes this year, the average Aussie still spends $44 per month, or $528 per year, on streaming services alone, according to Finder’s data.
Including other subscriptions like productivity tools, fitness, AI or gaming, Finder says Aussies could be spending thousands of dollars a year on subscriptions, which could be weakening their potential to buy a home.
And one bank has found that almost half of their customers are paying for subscriptions they don’t even use.
The cost of streaming services can quietly hurt household budgets. Picture: iStock
Finder personal finance expert Sarah Megginson said subscriptions may be minor expenses on the surface but lenders treated them as ongoing financial commitments that could directly reduce one’s ability to repay a home loan.
“When assessing your application, banks look closely at your net disposable income, which is how much money you have left over each month after expenses,” she said.
“Every subscription you’re paying for is included in that calculation, so obviously the more you have, the less capacity you appear to have to service a mortgage.”
Ms Megginson said the overall cost of subscriptions could equate to as much as $2,400 per year.
From a lender’s point of view, Ms Megginson said that’s $2,400 less you have each year that could be put toward loan repayments.
“As a result, your borrowing power may be reduced because of the total ongoing spending across your subscriptions,” she said.
“You may think you don’t spend enough on subscriptions and streaming for this to matter, but you’ll be surprised.”
MORE: ‘Zipper’ homes to help solve Sydney housing crisis
Finder personal finance expert Sarah Megginson. Picture: Supplied
With rents, mortgages and other essential living costs on the up, millions of Australians have recently cancelled a streaming service, with the majority doing so to save money.
A Finder survey of 1,015 respondents revealed almost one in three (32 per cent) Aussies – equivalent to 6.8m people – have culled a streaming subscription in the last 12 months.
Of those who have ditched a subscription, 50 per cent said they had done so to save money.
“With the cost of living soaring, millions of Australians are putting their monthly streaming services on the chopping block,” Ms Megginson said.
“Some families are looking closely at every dollar they spend, which can mean tuning out of TV shows and music apps because they need the money for everyday essentials, like rent and groceries.”
MORE: Developer frenzy as $170m, $80m sites launched
Gym and fitness subscriptions can be difficult to cancel. Picture: iStock
Bankwest chief digital officer Eleanor Bensley said 46 per cent of their customers were paying for a subscription they weren’t actively using.
“Unsurprisingly, entertainment streaming accounts reign supreme, with Netflix and Spotify leading the pack as the most subscribed to platforms for Bankwest customers,” she said.
With cost-of-living pressures putting additional strain on household budgets, Ms Bensley said actively reviewing and tracking discretionary spending was “increasingly important” to ensure value for every dollar spent.
“Keeping a close eye on monthly spending is important for those considering applying for a home loan, and actively managing subscriptions can be a factor in presenting a clear and informed financial profile to lenders,” she said.
MORE: ‘Wasted’ lawn costing Aussies thousands a year
Some banks allow users to track subscription fees. Picture: Supplied
Trimming back on subscriptions can be an “easy win” for the budget, Ms Megginson said.
“You can sign up to binge a specific series, then hit cancel and move on to the next provider once you’re done,” she said.
“The platforms make it pretty easy to come back after you’ve cancelled.”
She also recommended sitting down and taking stock of all your subscriptions, including music, streaming, creativity, health and AI.
“It’ll take you less than an hour, but you’ll almost definitely save money and put yourself in a better position to get your home loan application approved and even boost your borrowing power,” she said.
MORE: Billionaire lists Manly harbourfront
Aussies are most likely to be subscribed to Netflix, which raised subscription prices last year. Justin Sullivan/Getty Images/AFP
Australians with a streaming service are most likely to be subscribed to Netflix (64 per cent).
In August last year, the streaming giant raised the price of each of its subscription tiers in Australia, with its standard ad-free model rising from $18.99 to $20.99 per month.
MORE: Old Cronulla unit block sets Sutherland auction record
English (US) · 