Mortgagors’ confidence ‘convincingly reversed’: Economist

Falling house prices and increased home loan payments have inverted mortgagors’ confidence levels, a major bank economist has confirmed.

Commenting on the latest Australia and New Zealand (ANZ) consumer confidence data, conducted with Roy Morgan Research, senior bank economist Adelaide Timbrell outlined that average confidence among home owners paying off their mortgages ‘fell less’ than other housing status cohorts, though still ended the week (5 February) with lower confidence than renters and outright home owners.

“Before the start of the rate hiking cycle in May 2022, home owners paying off debt on average had higher confidence than outright home owners and renters,” Ms Timbrell explained.

“This has ‘convincingly reversed’ as housing prices have fallen and mortgage interest payments have risen.

“While home owners paying off debt did not see as much of a fall in the last week, they continue to have lower confidence than other housing cohorts.”

Overall, consumer confidence declined by 3.2 points (pts) last week to 83.6 and was its lowest level so far this year, the data outlined.

This decline in confidence trended across all five mainland states, it discovered.

Other key aspects of the report found that weekly inflation expectations rose 0.3ppt to 5.4 per cent, with its four-week moving average having increased by 0.1ppt to 5.4 per cent.

All the five confidence subindices registered losses, the report noted.

A cross-section of society

The weekly ANZ-Roy Morgan Australian Consumer Confidence Rating was based on 1,477 interviews conducted online and over the telephone during the week to Sunday, 5 February.

The declines were widespread, with current financial conditions falling 3.2 points and ‘future financial conditions’ having dropped 4.7 points below the neutral level of 100 for the first time this year, Ms Timbrell highlighted.

Current economic conditions decreased 1.7pts, while ‘future economic conditions were down 3.2pts,” she outlined. The time to buy a major household item declined 2.9pts.

Ms Timbrell commented: “Consumer confidence experienced its biggest weekly fall since early August 2022.

“Confidence about current and future finances fell sharply, perhaps sparked by concerns about the extent of cash rate rises after the Q4 inflation print.

“Household inflation expectations drifted up, but are still lower than expectations during the final three months of 2022.

“Average confidence among homeowners paying off their mortgages fell less than other housing status cohorts, though still ended the week with lower confidence than renters and outright homeowners.”

[Related: Mortgage stress hits 10-year high: Roy Morgan]