Consumers open wallets in January

Wednesday 20 February 2013

Article by Mozo

Low interest rates on home loans and an increase in property value is giving Australians an upbeat outlook into their financial year.

Consumers open wallet for purchasing home loans.

Consumer spending rose 1.9 percent in January according to the Commonwealth Bank's Business Sales Indicator, which tracks credit card and debit card transactions at point-of-sale-terminals.

Despite a 1.3 percent fall over the festive period, consumers are still spending more than they were 6 months ago. However the results show that consumers are on the hunt for bargains.

"The lift in spending in January coincided with post-Christmas sales, suggesting that consumers are more inclined to spend when goods or services are discounted," said Commsec chief economist Craig James.

Similarly, the Westpac-Melbourne Institute consumer index has shown an increase of 7.7 percent for February, it's highest level since December 2012. A rise in home values and an increase in share prices are being attributed as the likely reasons for the lift.

"The more positive February reading suggests lower interest rates may finally be starting to gain more traction with the consumer," according to Westpac's chief economist Bill Evans.

The Commonwealth Bank have suggested that 2013 could be a better year for business. Although, Mr Evans warns confidence is fickle and will depend upon the tone of the global economy.

The Westpac report also found consumers are positive on now being the right time to purchase a property. Those planning to enter the market should do a home loan comparison to minimise their cost of interest repayments.

Have a question about home loans? Ask the gurus at Mozo Answers.

Article by Kevin Boyle

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