Five major changes are set to reshape household budgets this year – affecting everyone from first home buyers to retirees.

Two of the five have been slammed for worsening inequality, and one helps an industry accused of price gouging.

But it’s not all doom and gloom.

Consumer choice should receive a welcome boost, too.

1. First Home Loan Deposit Scheme

The first change has already taken place.

On 1 January, the Coalition launched the First Home Loan Deposit Scheme, one of Prime Minister Scott Morrison’s key election promises.

The scheme provides aspiring homeowners with a loan guarantee of up to 15 per cent of the purchase price.

This means first-home buyers can purchase a home with a deposit as low as 5 per cent of the property’s value, without paying tens of thousands of dollars in lenders mortgage insurance.

While it will undoubtedly make life a lot easier for the 10,000 successful applicants, critics say the scheme could worsen inequality by “granting easier access to home ownership to people who are already more likely to attain it”.

2. The RBA is poised to take rates even lower

The Reserve Bank made plenty of headlines in 2019.

It took the official cash rate to a new record low on three occasions, ending the year on 0.75 per cent.

And Philip Lowe, its governor, appeared more than happy to criticise the government’s lack of spending.

The signs so far suggest next year will bring more of the same.

While opinion is split on whether the RBA will cut rates in February, most economists believe it will cut rates at least once more next year, in an attempt to drive down unemployment and lift inflation.

Critics, however, argue that interest rates are already so close to zero that further rate cuts will do little for the economy other than boost property prices.

And, as we’ve reported here before, that spells bad news for financial equality.

The Reserve Bank is expected to take interest rates even lower in 2020.

3. Health insurance premiums will jump

Health insurance premiums will increase by an average of 2.92 per cent on April 1, 2020.

The Department of Health has listed each insurer’s average premium increase here – though the amounts won’t be finalised until February.

The increases come after consumer advocacy group Choice found private health funds were ripping off customers by charging more for ‘silver’ policies than ‘gold’ policies with more coverage.

4. More ‘neobanks’ will set up shop

Comparison site Finder predicts “there will be millions of new neobank customers in 2020”.

Finder’s personal finance expert, Kate Browne, said consumers would be drawn in by the “innovative apps and products, as well as features like unique spending insights and bill reminders”. 

“In saying that, not all Aussies are ready to take the plunge just yet. Many people still feel more comfortable with a traditional bank or lender,” Ms Browne added. 

Up Bank co-founder Dominic Pym previously told The New Daily the bank had won over customers by marketing themselves as an alternative to traditional banks.

“People don’t want to deal with a bank,” he said.

“They don’t want the hassle. But they don’t think about us as a bank. They think about us as a brand that can help them with their finances.”

It’s worth noting here, too, that banks licensed by APRA are backed by the government’s Financial Claims Scheme – meaning customer deposits are protected up to a total value of $250,000.

The full list of authorised deposit-taking institutions (ADIs) can be found here.

Open Banking will threaten the dominance of the big four.

5. Open Banking will get us a better deal

Open Banking aims to redress the power imbalance between banks and their customers.

From February 2020, new legislation will require the big four banks to provide customers with access to mortgage data. 

From July 2020, they must hand over credit card, deposit and transaction data, too.

The new open banking regime will also enable customers to share their data with rival banks at the touch of the button – making it easier for companies to offer better deals to good customers.

Jamie Leach, founder of peak body Open Data Australia, described the new changes as “a game changer” in an interview with the ABC.

“The potential for people to move between brands, or the ease for people to be able to have products with multiple brands and still be able to track that through a single app, is real and that’s happening right now,” Ms Leach said.

“The old days where people have all their ‘eggs in one basket’ because it’s easier, is not going to be the future.”