‘Better than expected’: Aussies resilient to cost-of-living pressures

Two of Australia’s big four banks say Aussies are finding a way to pay their mortgages despite cost-of-living pressures.

Aussie mortgage holders are finding a way to pay their mortgages despite cost-of-living pressures.

Just days after Westpac told the market the peak of cost-of-living pressures may have passed, ANZ came out with results showing mortgage holders are resilient.

ANZ chief executive Shayne Elliott said Aussie mortgage holders were holding up despite the Reserve Bank keeping rates at a decade high of 4.35 per cent for a full year now.

“Higher interest rates are impacting customers and we saw an increase in those requiring hardship support. Our data shows customers, in general, are holding up better than expected,” he said in a statement.

ANZ said mortgage holders were finding a way to pay their bills despite cost-of-living pressures. Picture: NewsWire / Luis Enrique Ascui

Mr Elliott said those doing it tough should reach out to the bank to get the support they required.

“We know that’s not the case for everyone and our team stands ready to help those who are doing it tough with tailored solutions,” Mr Elliott said.

The call comes despite an intense rate hiking cycle in which the cash rate rose 13 times in a row before settling at 4.35 per cent for the last 12 months.

The ANZ chief executive said the “peak of the cost of living stress” appeared to have peaked in July, with stage three tax cuts helping mortgage holders.

The numbers coming through ANZ’s own accounts show households “overwhelmingly” have saved the tax cuts, Mr Elliott said.

“They didn’t run out and buy a new TV or a car or went on holiday. They put it in their offset account and they built their buffers.

“What we’re seeing in our lending book, and that’s what (ANZ’s) results show, it would appear that we hit peak stress in that sort of June, July period.

“I think it’s fair to say, that was the tax cuts. Since then, we haven’t seen any material or even reasonable deterioration. Things seem to have now flatlined.”

ANZ is not alone in noting mortgage holders are finding a way to pay their bills, with Westpac saying similar during its full-year results announcement on November 4.

The big bank also said the peak of the cost-of-living crisis might have passed, noting the number of mortgage holders that need help has fallen over the last quarter.

In a note to shareholders, it said the majority of customers were getting used to higher interest rates, as the Reserve Bank held the cash rate higher for longer.

Westpac forecast the number of customers needing help if rates were held until 2026 was unlikely to significantly rise, as on average they were still in front of their mortgages by 11 months despite cost-of-living pressures.

The big four bank said profits fell even though customers continued to pay their mortgages. Picture: NewsWire / Luis Enrique Ascui

The bank issued 47,500 hardship packages during the last investment period, but the vast majority of customers only needed them for three months.

It also said offset balances had grown by 10 per cent to $60bn, saying the bulk of customers are getting further ahead.

According to the big four bank, even if rate cuts are slow, “the majority of customers are used to these higher levels of interest rates”.

Westpac did caveat that this forecast was based on unemployment remaining low, saying higher rates would likely weaken the economy over impacting customers paying off their mortgage.

Despite highlighting a resilient customer, ANZ noted pressure from intense competition in the mortgage industry.

ANZ said its statutory profit after tax was down 8 per cent on last year, while its cash profits fell 9 per cent, excluding a $196m one-off payment for Suncorp Bank.

“Competition in the sector has continued to be intense, particularly in home lending and deposits. Despite competition and inflation impacting profits, we reported our second strongest revenue performance ever and a full-year cash profit of $6.7bn, helping deliver a total return of 27 per cent for shareholders,” Mr Elliott said.

“This strong performance again demonstrates the benefits of our simplification agenda combined with the targeted investments in our core banking businesses.”

Originally published as ‘Better than expected’: Aussies resilient to cost-of-living pressures