Slowdown hurting young renters more than mortgage holders: Comyn

afr.com:

Commonwealth Bank chief executive Matt Comyn says younger people and renters are feeling the sharpest financial stress in Australia, as higher interest rates and inflation start to grind the economy to a near halt.

With his bank forecasting that GDP will grow by just 1.4 per cent in 2023, Mr Comyn said spending had slowed considerably as households grappled with 12 interest rate rises in only 14 months. While mortgage holders bore the brunt of the changes, he said that young renters were feeling the most pain.

“We see more renters in stress than those that own their home,” Mr Comyn said. Martin Ollman

Those between 30 and 34 were under the most strain, Mr Comyn told parliament’s House of Representatives economics committee on Thursday, and “we see more renters in stress than those that own their home”.

The CEO said a third of his customers had reduced spending by 30 per cent year-on-year in response to the tougher economic conditions. Deputy CEO David Cohen said “the biggest changes [were] in the 25 to 29-year-old range.”

“It is there we are seeing considerable changes in things like discretionary spending – retail – and travel,” Mr Cohen told the committee. This was due to a range of reasons; younger people do not possess the same big savings buffers of older cohorts and, if borrowers, had more debt relative to income.

Westpac executive Chris de Bruin later told the committee there was a clear “statistical difference” between the spending of younger and older people, and this was a leading indicator of further challenges in the rest of 2023.

“We will see challenges in the rental market, and we will see some more stress in all household budgets,” Mr de Bruin, who runs Westpac’s consumer and business banking divisions,