Mortgagor spending eases month on month: Major bank

The Commonwealth Bank of Australia’s (CBA) latest Household Spending Insights (HSI) for May 2024 has found that home owners with a mortgage have increased their spending by 3.2 per cent year on year.

This has revealed a drop of 1.3 per cent on annual spending when compared to April 2024’s reading of 4.5 per cent.

CBA’s HSI recently introduced a new measure to track spending habits by splitting the data into three subsets: mortgage holders, people who own their homes outright, and renters.

According to the HSI, all three of these categories have seen a shift towards lower spending in recent months, with outright owner spending falling below mortgage holder spending in May 2024 with a 2.8 per cent annual rise.

Meanwhile, spending for renters remained steady at 1.3 per cent year on year, showing no change from April’s dataset.

According to the HSI, insurance, utilities, and food & beverage goods crowded the top three spots of spending contributions for mortgage holders at 9 per cent, 7 per cent, and 18 per cent, respectively.

Spending on motor vehicles and household services declined annually, down by 4 per cent and 5 per cent, while education and recreation neared the bottom of the list at 3 per cent and 13 per cent.

Outright owners, on the other hand, have increased spending the most on health, insurance, and recreation (6 per cent, 11 per cent, and 14 per cent), with a yearly decline in spending on household goods (15 per cent) and services (5 per cent).

CBA senior economist Belinda Allen said despite a rise in overall spending in May (up by 1.1 per cent monthly and 4.3 per cent annually), the “consumer environment remains soft”.

“It is unlikely tax cuts commencing in the third quarter of 2024 will have a material impact on consumer spending and we are expecting households to save rather than spend their tax cut,” Allen said.

“Looking forward, the key for consumption will be growth in real household income, and the first quarter 2024 National Accounts data indicated this remains weak.

“Assuming the labour market loosens and inflation continues to cool, we anticipate the Reserve Bank of Australia (RBA) can commence an easing cycle in late 2024. The challenging inflation backdrop and a shift in household spending behaviour are the key risks to this base case.”

[RELATED: Mortgage holder spending up 4.5%: CBA]

Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.