Cost of living, interest rate hikes weigh on sentiment, CCIWA confidence survey confirms

We all know worries about the soaring cost of living are weighing heavily on households – and now a survey has found a staggering number of mortgagors will cut back on essentials if interest rates keep heading north as expected.

The Chamber of Commerce and Industry WA poll of 925 West Australians found that for the June quarter so far, a whopping 76 per cent felt mounting living costs had dampened their confidence, up 10 percentage points since the March quarter.

Rising interest rates was close behind, singled out by 58 per cent of respondents, up 22 percentage points since last quarter.

If the Reserve Bank lifts the cash rate to 2 per cent – with expectations that will occur by early 2023 or even sooner – 51 per cent of mortgagees said they would cut back on essential items like groceries, health care and fuel.

This rises to per cent 66 per cent when considering the same scenario for discretionary spending.

Melissa Dinnison and Karl Schatke bought their first home in Morley about a month ago after doing careful modelling on what they could still afford in repayments if their finances went pear-shaped, knowing interest rates were set to rise.

But it’s not fruit that’s concerning the couple, both aged 31.

With the high price of fresh vegetables, they’ve turned to frozen veggies and are generally paying more attention to their grocery shopping.

The law student and her business analyst husband used to buy what they wanted from supermarkets without giving it much thought.

“Who could afford a $5 lettuce?” Ms Dinnison said.

“We’re definitely a little bit more aware about where our money is going.”

If times get tougher than expected, takeaways and the regular visit from their cleaner will get the chop.

“I still think this is better than renting, having someone come into your home and not knowing if the rent is going to go up,” Ms Dinnison said.

“At least with my mortgage, I can track in the news: everyone is on the same page.

“They put my rent over $150 in the two years that I was there. I prefer this.”