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Australian consumer sentiment falls as rate fears intensify
The Westpac–Melbourne Institute index dropped 5.2% in September to 84.4, while mortgage rate expectations rose and housing confidence weakened.
Australian consumer sentiment deteriorated sharply in September, with the Westpac–Melbourne Institute Consumer Sentiment Index falling from 88.9 to 84.4, a -5.2% monthly decline, according to Action Forex.
The report said the weakness was broad based. Assessments of family finances versus a year ago fell from 80.0 to 72.6, while expectations for family finances over the next 12 months dropped from 98.2 to 94.5, as renewed cost of living pressure from higher fuel prices and concern about stronger inflation fueled rate worries.
Action Forex added that rate fears were especially visible among mortgage holders. The Mortgage Rate Expectations Index rose from 158.8 to 170.4, with the share of consumers expecting mortgage rates to rise over the next year increasing from 59% to 64%, and about 73% among mortgage holders.
Housing sentiment also weakened alongside the shift in expectations. The time to buy a dwelling index fell from 95.7 to 85.5, unemployment expectations rose from 135.7 to 139.4, and Westpac expects the Reserve Bank of Australia to hold rates at the September 28 to 29 meeting, despite the increased risk of a future hike.