Australians with mortgages are prioritising paying down debt over saving, according to Agile Market Intelligence.
The number of consumer debt and mortgage holders prioritising debt repayment has increased as cost-of-living pressures bite, according to research from Agile Market Intelligence.
Agile Market Intelligence’s Consumer Pulse survey found that consumer debt holders shifted away from savings (down 5 per cent from last month), with the difference split between prioritising debt repayment and day-to-day expenses.
The survey, which asks around 1,500 Australian consumers every month about their top financial priority, found that 30 per cent of consumers are prioritising debt repayment, the highest recorded since March.
Debt repayment is the biggest priority for consumer debt holders at 43 per cent, while 34 per cent are prioritising saving.
The trend was particularly prevalent among mortgage holders. More than two-thirds (69 per cent) of this demographic reported debt repayment as their top financial priority in October, the highest percentage this year.
The change in financial priorities for Australians is likely to be linked to cost-of-living pressures and rising inflation impacting borrowers.
Recent inflation data released by the Australian Bureau of Statistics (ABS) revealed that underlying annual inflation has accelerated to 3.0 per cent for the September quarter, up from 2.7 per cent in the June quarter.
The figures mark the first time trimmed mean annual inflation has increased since December 2022, with the most significant price rises in housing (up 2.5 per cent), recreation and culture (1.9 per cent higher), and transport (up 1.2 per cent).
A 9 per cent rise in electricity costs was a significant contributor to the growth in housing inflation and broader inflation during the quarter.
Agile Market Intelligence research noted: “The shift toward daily living costs and away from savings among debt-free households underscores how broadly energy and other household costs are being felt across the population.”
The trend may also reflect borrowers wishing to reduce their loan debt, while rates are still falling, particularly as expectations of further rate cuts are diminishing.
Earlier this week, the Monetary Policy Board of the Reserve Bank of Australia (RBA) voted unanimously to hold the cash rate steady at 3.60 per cent for November, with governor Michele Bullock revealing the board did not even consider cutting the cash rate this month.
She said the board was “taking signal from stronger price increases that may suggest more inflationary pressure in the economy than we thought before”.
“Financial conditions have eased since the beginning of the year, but it will take some time to see the full effects of earlier cash rate reductions,” the RBA’s statement said.
“Given this, and the recent evidence of more persistent inflation, the board judged that it was appropriate to remain cautious, updating its view of the outlook as the data evolve. The board remains alert to the heightened level of uncertainty about the outlook in both directions.”
[Related: Most Australian mortgagors remain resilient as pressures ease: RBA]
