By Lucy Hughes Jones
(Australian Associated Press)
Consumer confidence has held steady despite an increase in home loan rates from the big banks.
The ANZ/Roy Morgan weekly consumer confidence index rose just 0.1 per cent last week, after slumping two per cent the previous week.
The result was somewhat surprising, given all four of the country’s major lenders have flagged a rise in their variable owner-occupier mortgage rates in the past two weeks.
The 1.6 per cent lift in the stockmarket, the stabilisation of the Aussie dollar, and an upbeat assessment of the economy from the Reserve Bank board minutes all played a role in offsetting that, Commonwealth Securities chief economist Craig James said.
While confidence was down one per cent over the year, it consolidated just above its long-run average.
Importantly, the measure on whether consumers felt now was a good time to buy a major household item rose to its highest level in three months, rebounding by 6.7 per cent.
“(That’s) a result that bodes well for the upcoming Christmas spending period,” he said.
But ANZ’s co-head of Australian economics Felicity Emmett said sentiment about current personal finances had fallen sharply, which likely reflected the news of higher mortgage rates.
Mr James said, the major lenders’ moves were essentially a quasi-tightening on the economy, which may be a hot topic at the Reserve Bank’s November board meeting.
“The national economy continues to improve but a rate cut before Christmas would help to boost activity across the nation,” he said.
Ms Emmett said that while respondents’ views about their household finances remained fairly solid, the economic outlook remained a concern.
“For some time, they have been without a positive narrative on the prospects for the economy,” she said.
But a broadly stable jobless rate over the past year, and hopes that Prime Minister Turnbull can deliver better medium-term economic outcomes appear to have boosted households’ economic outlook.
“The challenge will be to maintain this upward trend in an environment where the housing market looks to be slowing,” she said.