New England borrowers are feeling the squeeze with more mortgage-holders falling behind on their monthly repayments, albeit from low levels.
Yet even with higher interest rates and elevated living costs, the Council of Financial Regulators said most mortgage-holders were able to stump up the money each month by adapting their spending habits.
Treasurer Jim Chalmers said the economy was clearly under pressure from higher interest rates and that’s why his government did not deliver a “slash and burn” federal budget, as the opposition called for austerity.
“People are under the pump and that’s why our budget and our economic plan is all about easing cost-of-living pressures with tax cuts for every taxpayer and energy rebates for every household and for a million small businesses,” he said.
After the May budget, the government faced criticism for adding too much new spending and broad-based cost-of-living relief into the economy at a time when the central bank was trying to slow it down to tame inflation.
Dr Chalmers said the weak growth report for the March quarter, as well as a statement from the quarterly meeting of the financial regulators, proved the budget strategy to “fight inflation without smashing the economy was right”.
Shadow treasurer Angus Taylor said the government was spending too much and “slamming the accelerator” while the RBA “has its foot firmly on the brake”.
“(Prime Minister) Anthony Albanese and Jim Chalmers need to take responsibility for their economic mismanagement,” he said.
“Unfortunately, we continue to see them blaming everyone but themselves.”
With households tightening their belts and weighing on retail and other consumer-facing sectors, business confidence as tracked by National Australia Bank was knocked back into a negative reading in May from already weak levels.
Business conditions softened further in May, reflecting sluggish economic activity as seen in the March quarter national accounts.
NAB, along with Westpac and the Commonwealth Bank, expect interest rates to stay on hold until cuts start late this year while ANZ revised its call on Tuesday and is pencilling in a February 2025 start for an easing cycle.
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