Cheaper petrol prices over the last two years haves helped Australian households cut living expenses, boost savings and cope better with mortgage payments.
According to analysis by Fitch Ratings, households spent $2604 on average on fuel in the year to May, based on the average household consumption of 40 litres a week and the average national unleaded petrol price.
This is $260 lower than the previous 12 months, equivalent to an 11 basis point cut in the standard variable home loan rate, and $540 lower than the year before that, or about a 23 basis point fall. This is calculated against the average mortgage balance of $233,803.
Fitch believes this cut in expenses contributed to keeping mortgage performance strong in the Australian market, together with record low interest rates and buoyant house prices.
However, the ratings agency sounds a note of warning.
“Petrol prices show a higher degree of volatility than mortgage rates,” Fitch says. “Hence households may suffer an expense shock when petrol prices rise if they had not been able to translate the lower petrol expenses into savings.”
This chart tracks average petrol prices, according to the Australian Institute of Petroleum (AIP), against the standard variable home loan rate:
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