Mortgage holders depressed amid endless interest rate assault

The ANZ-Roy Morgan weekly consumer confidence index fell another 1.3% last week to its lowest level since early August:

The key movements in the index were as follows:

• Consumer confidence decreased 1.3% last week, its fourth consecutive weekly decline. Among the mainland states, confidence dropped in NSW, SA and WA, while it increased in Victoria and Queensland.
• ‘Weekly inflation expectations’ rose 0.1ppt to 6.1%, while its four-week moving average was up 0.3ppt to 5.8%.
• Four of the five confidence subindices declined. ‘Current financial conditions’ fell 1%, dropping 7% over the past four weeks. ‘Future financial conditions’ decreased 4%, after a 3.6% fall the week before.
• ‘Current economic conditions’ were down 1.5%. ‘Future economic conditions’ rose slightly by 0.6%.
• ‘Time to buy a major household item’ fell 0.7%, declining 11% over the past three weeks.

Commenting on the result, ANZ Head of Australian Economics, David Plank, noted that mortgage holder confidence plunged to its lowest level since the beginning of the pandemic in early 2020:

Consumer confidence dropped 1.3% last week, its fourth decline in a row and dipping to its lowest since early August.

Inflation expectations were up 0.1ppt to 6.1%, its highest since late March when petrol prices first peaked. Cost of living pressures are most likely a key reason for the renewed weakness.

Over the past four weeks, confidence has declined 7.6% as household inflation expectations have risen by 1.1ppt.

Confidence for those paying off their mortgage was down 4.7%, dropping to its lowest level since the early months of the pandemic. Confidence dropped 1.1% for those who own their home, while it rose 1.6% for those renting.

Given variable mortgage repayments have already soared 34% on the back of the RBA’s aggressive tightening:

It is no wonder that confidence of mortgage holders has plummeted. It will only get worse, too, as the RBA continues to hike rates.