Roy Morgan Update May 27, 2025: Consumer Confidence, Inflation Expectations and Mortgage Stress

In this week's Market Research Update, we present the latest data on Consumer Confidence, Inflation Expectations and Mortgage Stress.

Welcome to the Roy Morgan weekly update.

I’m Julian McCrann, Manager of the Morgan Poll, stepping in today for Roy Morgan CEO Michele Levine who is unavailable.

There was plenty of important news last week with the Coalition announcing a split – the first for the Liberal and National parties at a Federal level since 1987 – only to re-consider later in the week and appear to be on the verge of signing a new Coalition agreement.

As of today, no new agreement has been signed between the two parties.

Just yesterday, the seat of Calwell was finally called for the ALP giving the re-elected Albanese Government an equal record 94 seats in the House of Representatives. Former Liberal Prime Minister John Howard also won 94 seats in 1996.

There is still one seat outstanding – Bradfield – in which there are only a handful of votes between the Liberal candidate Gisele Kapterian and Independent Nicolette Boele and the seat, which is on a knife-edge, has gone to an automatic recount.

Earlier today, Tasmanian Senate results were computed and one of Australia’s most highly trusted politicians (according to Roy Morgan’s Net Trust rankings) – Tasmanian Senator Jacqui Lambie – was re-elected.

In addition, devastating floods in New South Wales impacted tens of thousands of Australians, leaving many homeless and sadly leading to the deaths of at least five people.

The big news on the economic front was the Reserve Bank’s decision to cut interest rates by 0.25% to 3.85% - the RBA’s second interest rate cut this year.

Australian interest rates are now at their lowest for two years although last week’s cut has failed to have an immediate impact on Consumer Confidence.

The latest ANZ-Roy Morgan Consumer Confidence based on interviews conducted last week, has fallen 1.8 points to 87.0.

Although an increase in Consumer Confidence may have been expected by many, there are reasons that explain the decline.

Around a third of interviews for the weekly result were conducted on Monday and Tuesday last week – before the Reserve Bank’s decision had been made or was widely known.

In addition, the ‘Big Four’ banks are yet to pass on the interest rate cut to home loan customers.

The announcements by the ‘Big Four’ last week indicate the cut will be passed through to home loan customers by Tuesday June 3 – a full two weeks after the RBA’s decision.

For these reasons, we expect to see the impact of the RBA’s decision impacting positively on Consumer Confidence over the next four weeks, rather than just last week.

Analysis of Consumer Confidence by Housing Status shows Australia’s housing market is split roughly equally between outright Home Owners, People Paying Off Their Home and Renters – about a third in each group.

The big mover this week – in the wrong direction – was Home Owners. Consumer Confidence for this group fell 4.8 points to 85.7 after the Reserve Bank’s interest rate cut.

There was also a fall in Consumer Confidence for this group after the Reserve Bank’s previous cut to rates in February.

Consumer Confidence for Renters was down slightly by 1.2 points to 87.1 this week.

Unsurprisingly, there was a positive impact on People Paying Off Their Homes – Consumer Confidence for this group increased 2.3 points to 89.7 – and now the highest of the three Housing groups.

This group is especially sensitive to Reserve Bank decisions on interest rates and we expect to see more positive momentum for this group as the banks pass through the interest rate cut over the next few weeks.

The Reserve Bank next meets in early July in six weeks’ time.

ANZ-Roy Morgan Inflation Expectations were up 0.2% to 4.7% last week.

Australians now expect inflation of 4.7% over each of the next two years – a figure in line with the long-term average of 4.8% for this measure over the last 15 years.

And now to Mortgage Stress – an indicator closely tied to the Reserve Bank’s interest rate decisions.

The latest Roy Morgan estimates show mortgage stress unchanged in April with an estimated 1.43 million Australians, or 26.5% of all Australians with a mortgage, ‘At Risk’ of mortgage stress.

The Reserve Bank’s decision to cut interest rates last week is set to reduce mortgage stress further in both May and June as the interest rate cut is passed through the economy.

The Reserve Bank’s next interest rate meeting is set for early July and if the Bank follows up with another cut in July, that would lead to a further reduction in mortgage stress. An interest rate cut of +0.25% in July would reduce interest rates to 3.6% - the lowest interest rate level since March 2023 – and this would reduce mortgage stress to 24.7% of mortgage holders