Shake off holiday mood for financial reckoning
FINANCIAL lifelines for cash-strapped Australians are due to end in the coming months, which could be dire for many households and businesses.
However, extensions are being made to help those who will financially struggle to get through a horror year.
Cash-strapped mortgage customers were given a reprieve when banks revealed they would be extending repayment holidays beyond their six-month break, but, of course, it is only for those who desperately need it.
The banks issued a strong message to customers that those who can start paying their loans again must, while for those who cannot pay could be given the option to have a further four months of breathing space.
This would see many people through until early next year.
But do not be fooled by repayment holidays — while they are necessary for some, interest is still charged during this paused period. It is added to the loan term, so effectively it is delaying the inevitable.
What remains to be seen is if there will be a significant impact on the property market once these repayment holidays dry up for good.
But let us face it, banks cannot provide loans where customers can stay on repayment holidays for years.
Many financially stressed businesses and their employees relying on government support are worried about what will happen when this financial lifeline ends in September.
There are 900,000 eligible organisations with 3.5 million employees who are receiving JobKeeper payments.
The $70 billion scheme is what has been able to keep many businesses afloat but, again, it is a short-term fix.
There will be businesses who will not survive this pan pandemic and JobKeeper will not be enough to keep them chugging along.
The federal government will release a review of the program on July 23 as part of its budget update.
But given what is happening in Victoria now, many businesses are going to need additional support.
It is devastating to hear the tales of Victorian businesses such as cafes, restaurants, pubs and gyms that were only starting to get back on track after opening up again to be now forced to shut up shop.
For eateries, it is back to takeaway only, while gyms have been forced to close completely.
What also remains to be seen is the true state of the nation’s unemployment rate once JobKeeper — in whatever form — ends.
It is likely many jobs that were given a lifeline simply will not be there once the government’s financial support is cut off for good.
Sophie Elsworth is a national personal finance writer at News Corp.