Consumer confidence remains strong, despite home loan rate hike ups
Article by Rebeccah Elley
Roy Morgan research shows consumer confidence has risen this week to its highest level since January 2014, in spite of the mortgage rate increases by a number of banks.
The main driver for this improvement in consumer confidence, was a more positive household outlook to the economy, which is 23% higher compared to levels eight weeks ago.
ANZ Chief Economist Warren Hogan explained that this turnaround in the outlook for the economy is an “encouraging sign and may hold the key to a sustainable lift in non-mining economic activity.”
Hogan said an important question to ask is whether this lift in confidence can be sustained and translate into stronger consumer spending.
“A softening housing market, ongoing weak wages growth, and elevated unemployment will present a considerable headwind to the recent increase in optimism, making the government’s economic policy platform even more important over the next 6-12 months,” added Hogan.
While outlooks on the economy have improved, Roy Morgan found Aussies are feeling less confident about their own finances, with attitudes about finances in the next 12 months falling by 1.3%.
Over the last month Mozo has seen home loan lenders lift interest rates for both owner occupier and investor borrowers, including the big four banks Westpac, CommBank, ANZ and NAB and smaller lenders like St.George, Macquarie Bank and Bank of Queensland.
While the Reserve Bank of Australia has left the official cash rate steady at 2%, the reason banks are increasing rates is due to APRA requiring banks to increase their capital by July 1 next year.
For big bank home loan customers of Westpac and CommBank the interest rate increases will result in a $36 difference in home loan repayments each month.
To see how much you could save by making the home loan switch, use our Switch & Save Calculator here.