Confidence levels among mortgage holders have sunk even lower ahead of the April cash rate decision.

Confidence among those paying off a mortgage fell 2.1 points to 70.5 points, putting the cohort 7.2 points below renters and those that own a home outright in ANZ and Roy Morgan’s weekly index.

Overall, consumers have regained some confidence ahead of the Reserve Bank’s lineball cash rate decision that has more economists leaning towards another hike but a pause firmly in contention.

The fastest round of policy tightening in decades has already added hundreds of dollars to mortgage repayments and another increase will ratchet up the pressure further.

Despite the modest 1.6 point uptick in overall consumer confidence to 78.2 points, ANZ and Roy Morgan’s weekly index remains stubbornly in depressed territory and has returned a below-80 point result for the fifth week in a row.

Three of the five confidence subindices increased, with ‘current economic conditions’ up 4.6 points, ‘future economic conditions’ up three points and ‘future financial conditions’ lifting 3.1 points.

Despite the improvement, ANZ senior economist Adelaide Timbrell said confidence in financial conditions, particularly current financial conditions, was now trending lower than it was during the start of the COVID outbreak.

The outlook for mortgage holders is bleak but higher interest rates are also making it harder for first time home owners to buy without falling into mortgage stress.

New Canstar analysis shows the average would-be solo home owner would need to earn $165,695 a year to buy a home without falling into mortgage stress.

The average annual before-tax income is $94,000.

The research explored how much buyers needed to earn to afford a house with a 20 per cent deposit but without contributing 30 per cent or more of their after-tax income toward repayments, which is how mortgage stress is defined.

With property prices already tracking back up despite the possibility of further rate rises, Canstar money expert Effie Zahos said home ownership would be even further out of reach for single-income earners.

“Even if there is a pause in April, it is expected the cash rate will be hiked up at least one more time during this cycle, meaning mortgage stress isn’t going away anytime soon,” she said.

– AAP