Weak spending and falling confidence collide with a looming rate call
Mortgage brokers are facing a tightening squeeze on borrowing capacity as fresh data shows household spending flatlining and consumer confidence sliding, just as all four major banks now expect the Reserve Bank (RBA) to resume hiking the cash rate.
Spending grinds to a near-halt
Australian household spending rose just 0.1% in August, according to CommBank's latest Household Spending Insights report, with gains in five of 12 categories offset by falls in an equal number. Transport led the pack, driven by a 3.4% jump in spending at petrol stations after the removal of the fuel excise tax cut and renewed conflict in the Middle East.
CommBank head of Australian economics Belinda Allen (pictured left) said "transport was the top-ranking category both in August and over the past year," while essentials spending overtook discretionary spending on an annual basis — up 4.8% versus 3.3%. Household goods spending fell 0.3% in the month, which Allen linked to the ongoing downturn in home prices and turnover.
CBA now expects the RBA to lift the cash rate by 25 basis points to 4.6% at its 28–29 September meeting, with a further November move dependent on inflation data and how the Middle East conflict evolves.
Confidence slips as banks brace for a hike
The spending slowdown lines up with a separate pullback in sentiment, with ANZ pointing directly to the RBA's own rate signals as a driver.
ANZ Economist Sophia Angala (pictured right) noted that Governor Michele Bullock's recent parliamentary testimony pointed to upside inflation risks materialising, and ANZ now expects the RBA to hike by 25 basis points in both September and November.
ANZ-Roy Morgan's Australian Consumer Confidence survey recorded a 1.9-point fall to 72 last week, with short-term economic confidence down 5.5 points and the "time to buy a major household item" subindex easing 4.1 points. Weekly inflation expectations rose 0.2 percentage points to 6.1%, with the four-week average holding at its highest level since late May.
For brokers, it's a clear signal to get ahead of client conversations now — repayment reviews and rate-lock discussions are timelier than ever with a hike all but locked in for September.
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