Households without a home loan show weakest annual increase in June spending index
Homeowners with mortgages increased their spending in June, according to the latest CommBank Household Spending Insights (HSI). In contrast, homeowners without mortgages continued to show the weakest growth in per capita spending.
The HSI Index rose 0.3% in June – its third straight monthly gain – after similar increases of 0.4% in April and May. However, the data revealed a clear divide in consumer behaviour based on housing status.
Households with a mortgage recorded a 5.2% rise in annual spending, compared to just 3.5% for those without a mortgage. Renters saw a moderate increase of 4.2%. The figures suggest that lower interest rates may be starting to ease pressure on indebted households, while more cautious behaviour persists among those with fewer financial obligations.
“Homeowners with a mortgage have reduced spending on transport, hospitality, and food and beverage goods over the past year but lower interest rates are expected to boost disposable income in the coming months,” said CBA senior economist Belinda Allen (pictured). “Renters continues to spend more following an increase in April and May.”
Spending rose in eight out of 12 categories in June, led by utilities (2.9%), education (1.1%), and communications and digital (1.0%). Volatile energy rebates affected utility trends, while tech-related spending likely benefited from the release of the Nintendo Switch 2.
Meanwhile, hospitality fell 0.8%, and both motor vehicles and recreation dropped 0.1%. All three categories had shown stronger performance in May, underlining the inconsistent nature of consumer demand.
“Household spending is starting to show signs of consistency month-on-month and should continue to pick up this year as consumers begin to loosen their purse strings,” Allen said. “The recovery is taking longer than expected to occur, but there are green shoots emerging.”
Despite rate cuts earlier in the year, internal CBA data shows that just 10% of eligible borrowers reduced their mortgage payments following the May cash rate reduction – similar to the February rate cut response. The bank expects further easing, with a 25 basis point cut anticipated in August and another likely in November.
Quarterly, household spending rose 1.4% in the three months to June, slightly up from 1.2% in the March quarter, but still below the 1.6% increase posted at the end of 2024.
New South Wales recorded the highest state-level monthly spending growth in June at 0.7%, and now leads the nation on annual growth at 8.4%. Queensland followed at 7.3%, recovering from disruptions caused by Tropical Cyclone Alfred in March.
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