Brexit affects Australian consumer sentiment

According to the Westpac Melbourne Institute Index of Consumer Sentiment, Brexit has affected Australian consumer sentiment.

At a press conference on 13th July the Prime Minister was keen to reassure Australian businesses and consumers that had their confidence shaken by both the China situation and by Brexit.

“The economy is strong and the stability and the prospects for our economy are very good,” he said.

“But there are, as I’ve said many times during the campaign, always the prospect of shocks, some anticipated, some not. That is why it is important to have a strong and resilient economy in Australia that is able to respond to that effectively. That’s why it’s important to have strong economic leadership.”

It appears that consumers may certainly need some reassurance, with the latest Westpac Melbourne Institute Index of Consumer Sentiment recording a 3% fall in July.

The good news, though, is that the fall could have been worse.

“Westpac’s Chief Economist, Bill Evans, commented, “With the major events of ‘Brexit’ and prolonged election uncertainty it is not surprising to see a fall in the Index. In fact, given these developments, this fall appears to be surprisingly modest.

“The survey was conducted over the period July 4 to July 7. By the time of the survey market volatility associated with ‘Brexit’ had largely settled down and media commentary was, correctly in my view, concentrating on the implications for the UK economy rather than the initial reaction.”

Reserve Bank expected to cut interest rates

Westpac expects a further cut in official cash rate at the RBA’s August meeting.

“The Reserve Bank Board next meets on August 2. We expect that it will decide to further reduce the overnight cash rate to 1.5%. This will follow the decision to lower rates by 0.25% at its Board meeting in May,” said Evans.

RBA cash rates over time

Source: RBA

Fixed home loan rates competitive

The expectation of a further rate cut may be widespread amongst Australia’s banks, with CANSTAR noting a number of home loan interest rate reductions in June and July, particularly in the 2 and 3 year-fixed categories. An indication of current 2 and 3 year fixed home loan rates for investors on CANSTAR’s database is as follows:

Investment 2 Year Fixed Home Loans Under 4.00% as at 13/07/2016
Rank Company Product Advertised Rate Comparison Rate*
1 Newcastle Permanent Investment Fixed 2 yrs 3.74% 4.85%*
2 Newcastle Permanent Premium Plus Package Investment Fixed 2 yrs 3.74% 5.16%*
3 Easy Street Fin Services Inv Fixed Rate Home Loan Offer 2 yrs 3.85% 4.63%*
4 Northern Beaches CU Inv Fixed Rate Home Loan Offer 2 yrs 3.85% 5.13%*
5 NAB (Exclusive to Brokers) Homeplus Package Inv Homeplus Fixed Rate PI 2 yrs 3.90% 4.75%*
6 NAB Choice Package Inv Standard Fixed 2 yrs 150k+ 3.90% 5.09%*
7 NAB (Exclusive to Brokers) Inv Homeplus Fixed Rate PI 2 yrs 3.90% 5.40%*
8 NAB Private Tailored Pkg Inv Standard Fixed 2 yrs 150k 3.90% 5.41%*
Investment 3 Year Fixed Home Loans Under 4.00% as at 13/07/2016
Rank Company Product Advertised Rate Comparison Rate*
1 UBank Inv UHomeLoan Fixed 3 yrs 3.69% 4.21%*
2 MOVE – People Driven Banking Inv Lockit 3 yrs 3.85% 4.80%*
3 iMortgage Investment Fusion Fixed PI 80 3 yrs 3.89% 4.18%*
4 AMO Group Investment Fixed 3 yrs 3.89% 4.23%*
5 ME Bank Member Package Inv Flexible Fixed Max 80 LVR 3 yrs 3.89% 4.46%*
6 BOQ Investment 3 year Fixed 3 yrs 3.89% 4.77%*
7 Newcastle Permanent Investment Fixed 3 yrs 3.89% 4.78%*
8 Newcastle Permanent Premium Plus Package Investment Fixed 3 yrs 3.89% 5.09%*
CANSTAR is an information provider and in giving you product information CANSTAR is not making any suggestion or recommendation about a particular credit product. If you decided to apply for a home loan, you will deal directly with a financial institution, and not with CANSTAR. Rates and product information should be confirmed with the relevant financial institution. For more information, read our detailed disclosure, important notes and additional information. The comparison rate is based on a credit of $150,000 and a loan term of 25 years.  *Read the Comparison Rate Warning.

 

Photo: Oversnap | iStock

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