Australian mortgage holders are demonstrating spending patterns that stand out from other demographic groups, with recent reports indicating increased expenditure and a more optimistic outlook on their finances.
These findings, based on two separate studies, reveal significant differences in how mortgage holders, renters, and outright homeowners manage their financial priorities amid rising living costs.
While the data points to unique trends among mortgage holders, it also highlights contrasting behaviours across other groups.
Experts, however, urge caution in interpreting these trends, citing broader economic challenges and uncertainties that continue to affect households across the country.
Spending Behaviours Across Demographics
Consumer spending is shaped by various factors, including age, financial obligations, and the rising cost of living. These influences are evident in the distinct habits of mortgage holders, outright homeowners, and renters. Among these groups, mortgage holders stand out for their increased expenditure.
Findings From the Commbank Household Spending Insights Index
The CommBank Household Spending Insights (HSI) Index reported a 1.8% decline in overall consumer spending in December compared to the previous year. However, mortgage holders defied this trend, with spending increasing by 3.8%, surpassing outright homeowners at 2.8% and renters at 2.4%.
Spending Categories Driving Growth
Mortgage holders recorded growth in 11 of the 12 spending categories analysed, including:
- Insurance and recreation, which saw double-digit increases
- Household goods and food and beverages
The only category where mortgage holders spent less was transportation.
In contrast, outright homeowners experienced declines in four categories, while renters spent less in three key areas, reflecting tighter budgeting behaviours.
Stephen Halmarick, chief economist at Commonwealth Bank, explained that spending trends among mortgage holders often align with their age group (typically 35–55 years old) and life stage. “These individuals are likely balancing household needs, school expenses, and holiday costs, which may explain their increased expenditure,” he said.
Consumer Sentiment and Its Implications
While actual spending provides a tangible measure, consumer sentiment reveals how Australians feel about their financial futures. According to the Westpac-Melbourne Institute Consumer Sentiment Index, overall confidence fell by 0.7% in January to 92.1.
Despite this, mortgage holders displayed a 15% increase in optimism compared to the previous year.
Factors Influencing Optimism
- Last year’s tax cuts disproportionately benefited working-age Australians, including mortgage holders.
- Confidence in anticipated interest rate cuts from the Reserve Bank of Australia (RBA) buoyed mortgage holders’ outlook.
- Renters and outright homeowners, however, remained less optimistic, reflecting concerns about economic uncertainty.
Luci Ellis, Westpac’s chief economist, highlighted that mortgage holders are more likely to anticipate rate cuts.
“This group has consistently been more optimistic about rate reductions compared to renters and outright owners,” she explained.
Expert Opinions and Challenges
Although these findings suggest optimism among mortgage holders, brokers warn against overinterpreting the data. Broader economic pressures, rising costs, and high interest rates continue to challenge households across the board.
Contrasting Broker Perspectives
Some brokers remain sceptical about the sustainability of these trends. Kevin Wheatley, founder of Bayside Residential and Commercial Mortgages, pointed to economic struggles impacting consumer behaviour.
key concerns raised :
- Rising insolvency and liquidation levels indicate financial strain.
- Higher-for-longer interest rates are squeezing household budgets.
- Increased spending may reflect rising living costs rather than financial confidence.
“Australia is in a challenging economic condition. While spending may appear to rise, it largely reflects higher costs rather than genuine financial optimism,” Wheatley said.
Meanwhile, Luke Ashby, a Queensland-based mortgage broker, observed mixed sentiments among clients. “Some are hopeful, while others remain cautious due to ongoing interest rate pressures,” he noted.
The rise in spending among Australian mortgage holders reveals more than just financial confidence—it underscores the complex interplay of rising costs, consumer priorities, and economic uncertainty.
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