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Consumer confidence has collapsed to a four-year low. Picture: Max Mason-Hubers Mortgage misery is at record levels as new data reveals Aussie mortgage holders are feeling the deepest levels of economic pessimism in almost 30 years. The Westpac–Melbourne Institute Consumer Sentiment Index is based on a nationally representative survey tracking Aussie’s perception of their finances and the overall economy.
The latest monthly data show general consumer confidence has sunk to a four-year low following the Reserve Bank’s recent decision to raise the cash rate to an 18 year high. MORE: ‘Don’t do it’!: Aus move you have to avoid right now Matthew Hassan is Westpac’s head of economic forecasting and said any potential economic positives have been swamped by inflation and interest rate concerns. Westpac’s head of Australian macro-forecasting Matthew Hassan said Aussies are “deeply pessimistic” and the RBAs impact on consumer sentiment is particularly clear.
“Family finances and the loss of purchasing power are still at the heart of the current weakness in sentiment,” Mr Hassan said. “Having already lifted the cash rate five times this year, monetary policy is now tight and clearly weighing on interest rate sensitive parts of the economy,” he said. Reserve Bank Governor Michelle Bullock said last week that the board was trying to avoid tipping the economy but warned that next year could “feel like a recession” for many Aussies.
MORE: Aussie misery spikes, relief years away Reserve Bank Governor Michelle Bullock said last week that the next year could “feel like a recession” for many Aussies. Picture: Nikki Short The Consumer Sentiment Index fell 2.7 per cent in the last month and hit 78.2 where a score below 100 indicates there are more pessimists than optimists. “The November Index read is the lowest since late 2022, when annual inflation was running at close to 8 per cent a year and the RBA raised the cash rate by four percentage points in little over a year,” Mr Hassan said.
“Prior to that, readings this weak had only ever been seen in the economy’s darkest moments: at the onset of the Covid pandemic; the height of the GFC; and during the recessions in the early 1990s and early 1980s,” he said. MORE: Detail proves Aussies to blame for RBA hike Mr Hassan said 92 per cent of mortgage holders were planning to spend the same or less money on Christmas presents. Picture: Brenton Edwards Mr Hassan said Aussie’s negative mood is a “troubling sign for retailers” heading into the Christmas season.
“Not surprisingly, consumers with a mortgage are more focused on reining in spending, 92 per cent of this subgroup planning to spend the same or less than last year,” he said. Mr Hassan said there had been a sharp downgrade in house price expectations but some consumers were starting to see the lower prices as a good time to buy. The survey follows recent calls to cut back on government spending.
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Source: Real Estate
