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Mortgage holders save rather than spend
Released 16 November 2011



Following the RBA's decision to cut the official interest rate, more than seven out of ten mortgage holders are choosing to continue to pay their mortgage at the same levels they had before the rate drop.    

A poll of 1,400 people across Australia by The Digital Edge (TDE) shows that 76 per cent of those with a mortgage intend to maintain their monthly payments at the same level as before the latest rate cut, instead of spending the extra funds freed up by the cut.

Aussie’s Founder and Executive Chairman Mr John Symond said the RBA had noted that its “restrictive” monetary policy over the last year, which they employed to counter inflation caused by the strength of the mining sector, had resulted in “cautious behaviour by households and the high exchange rate have had a noticeable dampening effect.”

“The RBA may have loosened its stance with its move last week, but our research shows it was not enough to inject confidence into our economy,” Mr Symond said.

“They will need to cut rates further if it is to have the desired effect of getting Australians to start spending again in order to stimulate parts of the economy, such as retail, which have been experiencing tough times.”

“Only 14 per cent of those with a mortgage said they would save or spend the extra funds freed up by the rate drop, which means that retailers can expect continued subdued trading in the lead-up to Christmas”, he added.

The poll also showed that 42 per cent of respondents felt more confident of proceeding to make a purchase if they were in the market to buy a property over the next six months, while 52 per cent felt neither more or less confident.

“Australians understand that our country is still susceptible to economic shocks from overseas and I believe that confidence levels will not improve much unless there are further rate cuts,” Mr Symond said.