Mortgage holder spending halves YOY

Household spending among mortgage holders has dropped to 1.5 per cent year on year in June, according to the latest Household Spending Index (HSI) data released by the Commonwealth Bank of Australia (CBA).

The monthly HSI has revealed two consecutive yearly declines in household spending from mortgagors, falling from 3.2 per cent in May and 4.5 per cent in April.

According to the research, cost-of-living pressures have impacted the whole household sector, from outright home owners to renters (where spending has dipped into negative territory in June at -0.9 per cent).

During June, mortgage holders spent the most on food & beverage goods (18 per cent), comms & digital (6 per cent), and household services (5 per cent).

However, owners with a mortgage have reduced spending over five categories that included household goods (down by 15 per cent), transport (7 per cent), utilities (7 per cent) recreation (13 per cent), and motor vehicle expenses (4 per cent).

Overall, the HSI rose by 0.6 per cent in June to 150.5 index points, which was primarily driven by increased spending on recreation (3.2 per cent) and hospitality (2.1 per cent).

CBA chief economist Stephen Halmarick said that while consumer spending remains relatively weak, the “path of monetary policy will be dependent on several key pieces of economic data in the coming weeks”.

“While it was somewhat surprising to see household spending rise for the second month in a row, we have witnessed a significant disparity in spending behaviours across home ownership categories, as renters pull back on spending in the year to June while mortgage holders and outright owners have increased spending,” Halmarick said.

Indeed, renters cut spending on the majority of categories, with the largest cuts being in hospitality (13 per cent), household goods (14 per cent), and recreation (12 per cent).

“This suggests younger Australians, who are more likely to be renting, are tightening their wallets and likely spending more on essentials, given these are the fastest growing spending categories so far this year,” Halmarick said.

“Looking ahead, the Household Spending Insights will be an early indicator of the impact of the income tax cuts and electricity rebates that began on 1 July.

“Our base case remains for the next move from the RBA to be easing of monetary policy, however this view will be dependent on upcoming employment and inflation data.”

[RELATED: Mortgagor spending eases month on month: Major bank]

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.