Australians to bank rate cuts rather than spend

Thursday, 10 November 2011

The Reserve Bank’s decision to cut official interest rate to 4.5 per cent has had little effect on consumer confidence with more than seven in 10 Australians revealing they would 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 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.

Mr Symond said the research showed: “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.”

As one of the country’s largest non-bank providers of financial services, Aussie has a loan book of over $40 billion, with more than 700 brokers across the country.

An Aussie broker will offer guidance, assess eligibility, lodge the application and then support the first home buyer borrower through the home loan process. Aussie brokers are available seven days a week in your home or at one of our 140+ stores at the request of customers who call Aussie on 13 13 33.

* http://www.rba.gov.au/media-releases/2011/mr-11-24.html

For further information please call:

John Symond
Aussie
(02) ) 8297 0702

Brooke Stoddart
Aussie
(02) 8297 0381

Tim Allerton
City PR
(02) 9267 4511 or (0412) 715 707