What would you do if the Reserve Bank decided to reduce the cash rate next month? Would you continue to pay the same amount off your mortgage, or use the extra cash in some other way? A national survey of over one thousand homeowners and investors commissioned by Mortgage Choice recently found that half intend to contribute more to their home loan if interest rates fall over the coming months, rather than spend any additional funds. Seven per cent would spend more but also save more by contributing extra to their home loan. As for the remaining respondents:
· 30% will `save more money in some other way’
· 6% will `spend more but also save more in some other way’
· 4% will `spend more and save the same amount’
Only 4% will throw caution to the wind and spend more without saving any money at all. Mortgage Choice spokesperson Kristy Sheppard said that this month’s cash rate decision (to leave it unchanged) should lead to improved consumer and business confidence as spring moves in.
Borrowers will be delighted with the decision, but obviously would have been much more relieved to see a rate drop.
The survey discovered only one in five of the respondents, all of whom were mortgage holders, will spend more if Interest rates drop.
Mortgage Choice spokesperson Kristy Sheppard said that this month’s cash rate decision (to leave it unchanged) should lead to improved consumer and business confidence as spring moves in.
Ms Sheppard remarked that de-leveraging while building a protective financial shield against tougher times is very much at the forefront of the respondents’ decision making.
“What they are doing is stopping the majority of mortgage holders from creating a bigger financial buffer via making extra repayments”, she concluded.
Source: Quartile Research www.quartileresearch.com.au