Australians are finally starting to feel the pinch from interest rate hikes
A significant portion of the Australian public will have empty pockets in early 2024, in what regulators believe will be a gloomy year for the economy.
Australians are really feeling the pinch. That’s the major economic takeaway from the latest statement from the Council of Financial Regulators, which was released last week.
“Budget pressures were being widely felt across households due to high inflation and increased interest rates, and the share of borrowers falling behind on mortgage payments had risen,” the council summarised.
This increase in arrears is coming off a low base. But it’s not comforting for those contemplating the year ahead, what might happen to household spending and, in turn, what it means for businesses.
The Reserve Bank previously estimated that, in July, 13% of households were in “negative cash flow” territory. Which is a charming way of saying they can’t afford their essential spending.
