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Will the Porsche IPO boost the stock market?

Porsche’s turbocharged IPO, offsets the order of the day as rates rise and retirees make headlines. Here are five things you may have missed this week.

Porsche is preparing to boost the stock market

Volkswagen has come a long way since the days of the Beetle (who can forget the dak-dak?).

VW merged with sports car maker Porsche over a decade ago, and while we can’t all raise the $84,000-plus for Porsche’s best-selling Macan, it may soon be possible to own part of the Porsche brand.

This week VW announced plans to list Porsche on the Frankfurt Stock Exchange. The initial public offering could be worth up to 85 billion euros (A$126 billion), potentially making it the biggest new listing in German history.

Some market commentators believe VW’s timing could be off as luxury brands Aston Martin and Ferrari have recently seen stalling values.

Nonetheless, Australian investors with access to overseas stock markets may be able to walk away with directly held Porsche shares. It’s also a safe bet that Porsche shares will end up in a variety of exchange-traded funds.

Offsets Are Growing in Popularity as Rates Rise

Homeowners are embracing offset accounts to make their mortgage more efficient.

Over the past 12 months, Australia’s largest home lender – CommBank, has seen demand for clearing accounts jump around 10%, with a similar increase in cash balances held in home loan clearings .

An offset is a current account linked to a home loan. Instead of being paid interest on the account, the balance is deducted (or offset) from the value of the home loan when monthly interest charges are calculated, helping borrowers save on interest charges.

Commonwealth Bank Home Buying’s executive managing director, Dr Michael Baumann, said the growing use of offsets is a sign that borrowers are “looking for ways to better manage their finances in the current environment”.

According to CommBank, a borrower with a $500,000 30-year home loan at a rate of 4.50%, who starts with $10,000 in an offset account and adds $100 each month, could save more than $60,000. interest over the term of the loan. .

5% deposit scheme helps first-time home buyers

The First Home Loan Deposit Scheme – now the Home Guarantee Scheme (HGS), allows first time buyers to enter the market with a 5% down payment and zero lender mortgage insurance.

New data from the National Housing Finance and Investment Corporation (NHFIC), which oversees the scheme, confirms that the HGS has enabled buyers who might otherwise struggle to enter the market, to reap the rewards of home ownership. property.

The NHFIC found:

  • First-time homebuyers using the HGS have a median household wage of $84,000, compared to $95,000 in the broader first-time homebuyer market.
  • Buyers under the HGS bought their homes with a down payment typically around $34,000, compared to $122,000 among other first-time buyers.
  • Less than 30% of HGS participants’ income goes toward paying off their first home mortgage, compared to 31.6% of income previously going toward rentals.

The downside of the HGS is that a 5% down payment doesn’t leave much room for the property value to drop before the mortgage exceeds the value of a home.

With nationwide house prices down 3.4% in the last quarter – and further declines expected, this could be a problem for recent buyers.

Retirees encouraged to downsize

It’s been a big week for older retirees.

First, the news that from September 20, the maximum age pension will increase by $38.90 per fortnight for singles and $58.80 for a combined couple. This is the largest increase in nearly a decade.

Additionally, the Albanian government is aiming to introduce legislation that will grant pensioners an additional 12-month exemption on asset testing on the proceeds of a house sale before pension payments are impacted.

The aim is to get more older people to downsize, freeing up housing stock for young families. Only about 8,000 retirees downsized last year.

Social Services Minister Amanda Rishworth said: “We don’t want people delaying downsizing because they’re worried about the impact it might have on their (pension) payment rate and their overall income.

However, this may not be enough to induce older people to downsize.

Research by the Australian Housing and Town Planning Research Institute found that many older homeowners simply don’t want to leave a much-loved home.

Also, high property values ​​can leave retirees with a substantial cash pool even after buying a smaller house, risking losing their old-age pension altogether.

Work longer? Count on me!

Six in 10 Australians would rather work longer than adjust their expected standard of living in retirement according to AMP’s latest Financial Wellbeing Report.

He revealed that most of us are flying in the dark when it comes to retirement, with almost half of working Australians not knowing how much they need to save for retirement.

Planning to work longer is fine in theory, but it’s not a certainty.

Figures from the Australian Bureau of Statistics show that Australians plan to retire, on average, at 65.

In reality, however, the average retirement age is closer to 55, with retirement often bought out prematurely due to poor health or disability.

That’s a good reason to stay focused on super growth, especially as we head into retirement.

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