More than 70 per cent of Australians have admitted they will use the latest rate cut by the Reserve Bank to overpay their mortgage.
A new survey of 1,400 Australians conducted by Aussie Home Loans found 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 it 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."
This is at odds with the most recent Westpac Melbourne Institute Index of Consumer Sentiment, which suggests the November 1 rate cut will inspire more Australians to loosen their purse strings.
“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,” Mr Symond continued.
The poll also shows 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,” he said.