In painting a rosy picture of how n households were coping with interest rates at a 12-year high, Reserve Bank Governor Michele Bullock ignored advice given by her own analysts that many were struggling to put food on the table.
In late November Ms Bullock told a high-powered meeting of central bankers that ‘despite the political noise’ generated by 13 cash rate hikes in 19 months, n households and businesses were ‘in a pretty good position’.
However, a Freedom of Information request tweeted by former Senator Rex Patrick shows just 12 days before Ms Bullock made this claim, the RBA’s Economic Analysis reported community service organisations were being swamped by pleas for help.
‘Cost of living pressures remain acute for their constituents,’ the analysis reads.
Reserve Bank Governor Michele Bullock told a meeting of central bankers in November that households were holding up ‘surprisingly’ well financially in the face of 13 cash rate hikes
‘More people than usual are seeking support from community services organisations, including wage earners and households with mortgages who have sought food support.
‘Calls for support include housing assistance, financial counselling services, mental health services, domestic violence services and food support.’
Ms Bullock in November said households and n business were proving remarkably resistant in the face of the rate hikes.
‘We’ve been surprised a little bit on the strength of activity,’ she said.
‘It’s held up a little better than we thought. That’s meant that services price inflation has held up a bit more. So what we’re observing is a bit more domestic price pressures than we’d expected.’
However, Ms Bullock admitted many borrowers were ‘very unhappy’ with the central bank, which she put under the category of ‘political economy challenges’.
In December, Reserve Bank head of financial stability, Andrea Brischetto, admitted mortgage repayments were squeezing households but said most were coping by working longer hours or getting better paid jobs in a tight labour market.
‘While there has been an increase in the number of borrowers who are under severe financial stress, the vast majority of borrowers remain able to cover basic expenses and service their loans,’ she said in a speech on Friday.
Food charities have reported a growing number of mortgage holders needing their services (pictured charity van feeding the homeless in Sydney)
However, the RBA said it was aware that Google searches for financial counselling and the National Debt Helpline were spiking.
In October, the RBA reported the proportion of n mortgage holders having to commit more than a third of their income to home repayments, which is considered a ‘red line’ benchmark of financial stress, has increased sharply.
The percentage of variable-rate owner-occupier borrowers devoting at least one-third of their reported income to mortgage payments jumped from about 4 per cent in April 2022 to about 20 per cent in July 2023.
The majority of borrowers had seen monthly payments shoot up between 30 per cent and 50 per cent during the same period.
Charity Foodbank reported in October that over a quarter of mortgage paying households in NSW and the ACT (27 per cent) had experienced trouble feeding themselves.
In a 2023, charity Secondbite found that of those households suffering moderate food insecurity, 16 per cent had mortgages, while 18 per cent of households experiencing severe food shortages were paying off a property.
‘Food insecurity is now affecting households that have never been touched by it before,’ the report said.
‘In the last 12 months, 77% of those households experiencing food insecurity did so for the first time last year.’
Former South n independent Senator Rex Patrick tweeted the FOI showing the RBA analysts were saying something different than the governor
‘We moved into our own house and interest rates went up at the same time,’ a charity recipient was quoted as saying.
‘My partner has just started a business and I started in a new job. Outgoings are simply more than incomings.’
Many of those commenting on Mr Patrick’s tweet accused Ms Bullock of being out of touch with the distress being felt nationwide.
‘I live in Central Queensland and I have never seen so many people being forced out onto the street by their landlord making entire families homeless,’ one person wrote.
‘Blind Freddy could see many people are not coping with the interest rate hike and the knock-on effects,’ another noted.
However, some accused charities and NGOs of exaggerating the problem.
‘The social services providers drum up a storm so they can keep expanding,’ one person said.
‘Like America growth industries will soon be in welfare and government.’