On Wednesday, Westpac released their latest Consumer Sentiment Index, giving us an idea of where Aussie heads were at regarding their finances.
The report, produced in conjunction with the Melbourne Institute, showed consumer sentiment was down by 1.2% from July.
But why is our mood so low? According to Westpac’s Chief Economist, Bill Evans, the pressure on household finances is the major factor behind our dampening spirits.
“The survey detail suggests increased pressures on family finances; concerns around interest rates; and housing affordability in NSW and Victoria are more than outweighing increased confidence around jobs,” said Evans.
The reading means that Aussie pessimists have outnumbered economic optimists for nine straight months - a streak that hasn’t been recorded since 2008.
“Much of the weakness is likely to reflect a mix of weak growth in wages; increases in key costs such as electricity and emerging concerns about rising interest rates,” said Evans.
It is no real surprise to see electricity costs as a major factor behind declining consumer sentiment. Last month, Energy Consumer Australia’s Energy Consumer Sentiment survey revealed that Aussie’s rate their electricity plans last in terms of value for money.
But only 13% of Aussies seriously considering switching providers despite the fact that according to Mozo data, households could save in excess of $1,000 a year on their power bill if they switched to a better value provider.
“Our analysis found that a typical 3 person household could save up to $1,086 on their electricity bill each year by switching from the highest priced plan to the most competitive on the market,” said Mozo Director, Kirsty Lamont.
Evans also cited “emerging concerns about rising interest rates” as a driving force behind the low reading, despite the RBA leaving interest rates on hold during August.
“Responses to an extra question this month around the outlook for mortgage rates show that, of those consumers with a view, 71% expect rates to be higher in 12 months; 27% expect rates to be steady; and just 2.6% expect further rate cuts,” he said.
With the majority of Aussies expecting interest rates to climb over the next 12 months and the sentiment of Aussie’s with a mortgage falling by 6.1%, it could be time to take some action and look at refinancing or switching your home loan provider.
Remember to check out Mozo’s dedicated Family Finances hub for more tips to alleviate your financial stress.