RBA’ decision to raise mortgage rates did not impact consumer sentiment

By FXStreet FXStreet (Mumbai) – The Westpac Melbourne Institute Index of Consumer Sentiment rose by 3.9% in November. It moved from 97.8 in October to 101.7 in November. It now stands 8.3% higher than in September. This increase in index was registered despite the RBA’ decision to raise mortgage rates for both owner occupiers and investors. Surprisingly, events such as these did not have a negative impact on confidence.

However, some conflicting movements amongst the components of the Index were noted. The sub-index tracking assessments of ‘family finances compared to a year ago’ fell 2.2% and the sub-index tracking expectations for ‘family finances over the next 12 months’ slumped 9.1%. The increase in mortgage rates probably in resulted in the dip.

Political events boost confidence

The boost that the consumer confidence received post the recent political events helped to contain the impact of the double interest rate rise. The confidence of respondents who hold mortgage increased by 4.1%. The sub-index tracking expectations for ‘economic conditions over the next 12 months’ increased 5.8% while that tracking expectations for ‘economic conditions over the next five years’ soared 24.2%

The Westpac Melbourne Institute Index of Unemployment Expectations rose by 3.3% in November. The index indicates fewer consumers expect …read more

Source:: FX Street