Almost six in 10 Australian home-owners will pay their home off faster thanks to the two latest rounds of official interest rate cuts by the Reserve Bank.
A recent poll by real estate agents PRDnationwide found Australians are taking advantage of the rate cuts, with 68 per cent of borrowers putting the extra savings toward the principal loan.
According to the research, 18 per cent of borrowers said they plan to put the extra away as savings, while 8 per cent said they will spend the cash on discretionary items.
PRDnationwide research director Aaron Maskrey said the survey showed 6 per cent of respondents would spend the saved money on staple goods.
“These people are most relieved to see the RBA reduce the official cash rate – as they were probably struggling to afford the loan repayments,” he said.
Mr Maskrey said the RBA was expected to announce further reductions this month.
“Using the discount towards the principal is very savvy and a reflection of borrowers feeling vulnerable during a period of economic instability,” said Mr Maskrey.
“If the borrower can benefit from reduced rates, then do it.
“Keeping the extra for a rainy day is also a smart move as unemployment figures could increase with the economic instability.”