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Mortgage holders have increased spending more than those who own their home outright, in a possible sign that financial pressure is easing on borrowers.
Spending among homeowners with a mortgage grew more in December than for Australians who own their home outright, according to research from the Commonwealth Bank of Australia (CBA).
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In the latest edition of the CommBank Household Spending Insights (HSI) Index — which tracks month-on-month data from payments data from approximately 7 million CBA customers — the bank found that mortgage holders spent 3.8 per cent more in December 2024 than they did the year before, up from a 0.4 per cent increase in November.
Notably, the bank found that mortgagors were spending more than those who owned their home outright. Those who fully owned their homes spent 2.8 per cent more in December, edging up from a 2.7 per cent increase the month before.
CBA said that the difference “looks to be centred on recreation spending”, a possible signal that renewed confidence among mortgage holders is driving increased expenditure on non-essential items.
Over the past year, those with a mortgage cut their spending on transport while education and hospitality expenditures were among the lowest contributors to spending growth.
The largest contributors to spending for this cohort were insurance, recreation, and household services.
However, for those who owned their home outright, the largest contributors to spending growth was insurance, communications and digital services, and health.
Renters continued to be the weakest spenders out of the homeownership categories, growing at 2.4 per cent annually in December, accelerating from a 0.4 per cent climb in November. However, insurance was also the largest contributor to spending growth for this category.
More broadly, the HSI Index fell by 1.8 per cent in December 2024, after a strong Black Friday sales spending boost in November.
Indeed, CBA chief economist Stephen Halmarick said that consumer confidence remained subdued.
“The fall in household spending in December and subdued growth throughout 2024 emphasises that the consumer remains cautious,” he said.
“As we’ve seen in past years, sales spending on items like household goods was brought forward to October and November to take advantage of Black Friday sales promotions, which resulted in a drop in December.”
Halmarick backed calls for a February rate cut, saying: “The weakness in spending in December, combined with the improving inflation environment, supports our view that the RBA can begin to lower interest rates at the first meeting of the year in February.
“We expect 100bp of monetary policy easing through 2025.”
CommBank research follows findings from Westpac and the Melbourne Institute that showed improved consumer sentiment towards housing, driven by growing optimism about potential mortgage rate cuts.
Westpac chief economist Luci Ellis said: “The increase could reflect a combination of the growing view that mortgage rate decreases are coming, and a recognition that housing prices have slowed or even fallen in most population centres.”
However, she said that sentiment towards housing is still below historical levels.
[Related: Expected rate cuts lift housing sentiment]
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