Yesterday we reported how Westpac’s monthly consumer sentiment index showed a clear difference in sentiment readings before and after the RBA’s rates decision:
Those surveyed after the RBA Board meeting were deeply pessimistic, with a reading of just 72.6pts – down nearly 10% from the month before.
Overall, sentiment “held around levels we have not seen on a sustained basis since the deep recession of the late 1980s/early 1990s”, noted Westpac; although that was obviously biased upwards by those surveyed before the RBA’s decision to lift rates.
The ANZ-Roy Morgan weekly consumer confidence index has also been released, which was taken after the RBA’s latest rate hike.
It tells a similar story, with confidence falling to its lowest level since the lowest point of the pandemic in early April 2020:
According to Roy Morgan CEO Michelle Levine, “consumer confidence has now spent 15 weeks below the mark of 80 – the longest period at recession levels since the index began”.
“This is really worrying” Levine added. “The Reserve Bank’s interest rate increase prompted negative responses across the population, but especially from those most directly impacted people paying off their homes, people with a mortgage”.
“So consumer confidence for people paying off their homes plunged five Points to only 66.2 – a record low for this group”.
“Consumer confidence for renters was also down sharply by five points to 75.5, and down almost one point to 75 for homeowners”.
ANZ Senior Economist, Adelaide Timbrell, made similar observations:
“Consumer confidence fell to its lowest since April 2020 and was among the four weakest results since the pandemic”.
“Confidence has been at extremely weak levels for around 15 weeks but has fallen 7.2pts further in the last six weeks. Confidence about economic conditions, both current and future, fell most sharply last week following the latest RBA cash rate increase to 4.1%”.
“Confidence about current financial conditions, future financial conditions and the ‘time to buy a major household item’ are all within 0.1ppt of their lowest since March 2020”.
“Confidence fell among renters, outright owners and those paying off their homes, though those paying off their homes fell to a record low”.
Mortgage repayments are forecast to soar to a record share of household income once the RBA’s rate hikes filter through and the fixed rate mortgage reset runs its course:
Thus, the next year are shaping as a disastrous year for Australian households, particularly the one-third stuck paying down a mortgage.
