This time next week the media will be full of references to Valentine’s Day and the Australian Retailer’s Association is tipping that the country’s lovers will fork out a record $535 million in monetising and demonstrating their affection for their beloveds!

But there is a woman who hopefully will attract an avalanche of cards and flowers and that’s the Governor of the Reserve Bank of Australia, Michele Bullock, who economists strongly suspect will deliver the first of possibly four interest rate cuts on Wednesday — two days before Valentine’s Day.

I’m not sure if the ARA’s economist has factored in the expected rate cut but Ms Bullock’s decision on February 12 could have a big bearing on just how enthusiastic lovers will be when their weighing up their adoration with potential cashflow.

And be clear on this: while there are plenty of Australians set to help push Valentine’s Day spending to that record number, one third of households would be under a fair bit of mortgage stress because of the 13 rate rises since May 2022.

Research from Roy Morgan showed 26.8% of mortgage holders are now ‘at risk’ of mortgage stress. The research was conducted in the three months to November 2024 and represents a small increase on October but is 3.5% lower than the June figures prior to the Stage 3 tax cuts that increased household income for Australians.

These simple numbers show how tax cuts helped reduce mortgage stress, but Roy Morgan says there are still 707,000 Australians ‘at risk’ of mortgage stress more than two years after interest rate increases began.

But the research looks even more worrying when you find out that “the number of Australians considered ‘extremely at risk’, is now numbered at 931,000 (16.9% of mortgage holders), which is significantly above the long-term average over the last 10 years of 14.6%.” (Roymorgan.com)

The Daily Telegraph tells us that the ARA thinks “restaurants, florists and retailers crippled by a cost of living crisis will be saved by love this Valentine’s Day,” and the appropriately Fleur Brown from the peak body retail group thinks lovers will look past the cost of living crisis because data shows “the want for spending on loved ones has skyrocketed”.

“It is a simple case of what we like to call ‘revenge spending’,” Ms Brown told the Telegraph. “There is no denying people are doing it tough, but what we have seen are people choosing their moments to spend and those moments are the ones with loved ones.”

According to Ms Brown, men are set to spend up big on flowers, chocolate and experiences like dinners and trips away, while women are expected to treat their men to food, chocolate and alcohol.

What is surprising from these ARA numbers is that men are expected to spend an average $162, while women plan to spend $110 each. That gives you an idea of how you compare to the average Valentine’s Day spender!

And these numbers could easily go higher if Ms Bullock cuts interest rates on Wednesday, which would be a great shot-in-the-arm for consumer confidence, which would help reduce mortgage stress.

Canstar says one rate cut of 0.25 percentage points would mean monthly repayments on a $600,000 mortgage will fall by $92, according to Canstar.

Right now, the economics teams of the four big banks expect a cut and HSBC’s local chief economist, Paul Bloxham, who once thought there’d be no cut this year, is now on board with a February rate cut.

Bloxham has brought forward his expectations of a rate cut to February, following a ramping up of US tariff uncertainty and better-than-expected local inflation data.

Of course, the RBA could follow its tradition of being too cautious and delay the cut, but it would be a mistake. And the Governor, rather than being the country’s favourite funny Valentine, could end up being stressed by mortgage holders and struggling small business owners.

(For those out of the music loop, Frank Sinatra sang a popular song called My Funny Valentine, which has become a jazz classic. Others like Barry Manilow and Tony Bennett have done covers.)