Consumer Confidence at Record Low: What It Means for Borrowers

Consumer confidence is at a new low: the ANZ–Roy Morgan index fell to 63.1 points, the weakest since surveys began. Australian households are feeling the squeeze as borrowing costs rise (the RBA cash rate is now 4.10%) and inflation remains elevated (about 3.7% year-on-year). Only 14% of people say they’re better off than a year ago, while 57% say they are worse off. And with just 14% believing now is a good time to buy big-ticket items, many potential buyers are delaying major decisions like applying for a new home loan.

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From a mortgage broker’s perspective, this cautious mood is crucial. Borrowing sentiment is cooling, so loan demand may soften as clients become more hesitant. However, lower competition can create opportunities for well-prepared buyers and investors with fewer bidders, and you may have more negotiating power. On the other hand, higher rates mean smaller borrowing power and higher repayments than a year ago. As brokers, we watch these trends closely and advise clients to focus on strategy now.

Key considerations for borrowers and investors

• Loan structuring: Split your loan between fixed and variable rates. Fixing part of your loan can lock in today’s repayments before any future rises, while keeping some at a variable rate gives you flexibility. Use features like offset accounts or redraw facilities where you can, to reduce interest costs.

• Stress testing: Figure out how your repayments hold up if rates go higher, then give yourself a buffer. A bit of extra savings or income in reserve goes a long way if the RBA moves again.

• Market readiness: Do the groundwork now. Get across suburbs, pricing, and lenders so that when the right opportunity shows up, you can move on it quickly. In a slower market, buyers who are prepared tend to walk away with the better deals.

• Government incentives: Stay informed about any policy changes (first-home buyer grants, loan guarantees, etc.) that could help you. Mortgage brokers will flag any new schemes or relief measures that affect your borrowing power or budget.

• Expert advice: Remember that brokers can clarify how all this affects your borrowing power. Speak with a broker to understand your options in this climate and get a personalised strategy.

In short, the combination of record-low confidence and higher interest rates means everyone should be cautious but prepared. At Ask Financials, our brokers stay on top of RBA decisions, inflation data and housing trends to guide you. We help review your loan options, compare lenders and set up the loan features that suit your goals. The right loan structure today. For example, a split loan with an offset account can save you money in this market.

Ready to make your move? For tailored advice or to discuss your buying strategy, contact Ask Financials.

Call 0433 944 055 or book a free consultation today, and follow Ask Financials on Instagram and the LinkedIn newsletter for regular insights and updates.