Mortgagor spending edges down

The latest Household Spending Index (HSI) for August released by the Commonwealth Bank of Australia (CBA) has revealed that household spending by mortgage holders has eased to 2.8 per cent per annum.

This was down from the 3.3 per cent recorded in July, which followed consecutive declines in spending from all three observed household types (mortgage holders, owners outright, and renters) since the data subset began in April 2024.

The largest contributors to household spending for mortgage holders in the year to August were food & beverage goods (18 per cent), hospitality (9 per cent), and insurance (9 per cent), according to the HSI report.

Spending was reduced on utilities due to government rebates (7 per cent), transport as a result of lower petrol prices (7 per cent), and motor vehicles (4 per cent).

Meanwhile, spending by renters ramped up in August from 0.4 per cent to 1.3 per cent; however, the HSI reported that this appears to be “related to education costs” during the month.

Spending from those who own their homes outright dropped to 1.8 per cent in August from 4 per cent the previous month.

Commenting on the data, CBA chief economist Stephen Halmarick said: “For the first time in August, we saw the impact of the various government electricity rebates on wallets which can be seen by the decreased spending on utilities.

“This, coupled with increased education spend, impacted spending across home ownership categories as we saw a jump in spending by renters likely due to university fees, while outright owners benefited from reduced spend on utilities as this is typically a larger share of their wallet.

“While the earlier timing of Father’s Day has added some complexity to the data, we still anticipate that softer economic conditions, easing inflation, and rate cuts by other central banks will prompt the RBA to lower interest rates later in 2024.

“However, there is a possibility of delays pushing this into early 2025.”

Overall, the index rose by 1.8 per cent in August to 154.3, with 10 of the 12 spending categories recording increases during the month.

Hospitality (5.2 per cent) and household goods (4.4 per cent) were the most prevalent increases in the lead-up to Father’s Day.

However, the annual pace of spending in the year to August remained subdued at 3.7 per cent for the year.

[RELATED: Annual spending among mortgage holders ramps up]

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.