Borrow
The rate cut that never came
Nearly one in five Australians made a financial decision at the end of 2019 that factored in a fourth rate cut last year, even though that rate change never came.
The rate cut that never came
Nearly one in five Australians made a financial decision at the end of 2019 that factored in a fourth rate cut last year, even though that rate change never came.
A survey commissioned by online loan marketplace money.com.au has revealed how 17 per cent of Australians – based on a nationally representative panel of adults – actively made financial decisions in expectation of a further rate cut after the October change.
Of this percentage, nearly one in three (31 per cent) indicated they took out, or switched to, a variable personal loan, home loan or car loan in expectation of even lower rates.
One in 10 (or 11 per cent) said they had borrowed more on their home loan, thinking interest rates would fall a further 0.25 to 0.5 of a percentage point.
A similar amount (10 per cent) increased their personal spending towards the end of 2019, while 8 per cent had planned bigger purchases for 2020 such as holidays.
Helen Baker, a financial adviser and spokesperson for money.com.au, said the results indicate a proportion of mortgagors will usually borrow the maximum amount they can, without much give.
“For borrowers who expected the fourth rate cut last year, we can see that many chose to increase their borrowing rather than pay down more of the principal and pay debt off faster,” she commented.
As well as indicating a lack of concern around debt levels, Ms Baker said it shows a number of Australians “believe their employment income will continue and they are comfortable with their ability to service loans at a higher level”.
Furthermore, the financial adviser said these individuals are unlikely to have concerns that reduced interest rates “is a form of stimulus to deal with bigger economic problems at play, such as low wage growth and a poorly performing retail sector”.
RELATED ARTICLES
About the author
About the author
Loans
Fixing the future: How brokers and lenders can turn rate-hike anxiety into strategic advantage
Australian borrowers are leaning into short-term fixed loans as rate uncertainty lingers, shifting risk from households to lenders and their funding partners. That creates a narrow window for broker ...Read more
Loans
Mortgage mania: Why sluggish turnaround times are the new battleground in booming loan demand
Brokers across Australia are flagging loan processing delays precisely as borrower activity rebounds — a dangerous mismatch for lenders competing on service as much as price. The operational lesson is ...Read more
Loans
Why AI isn't penning Aussie mortgages yet trust trumps tech
Australian borrowers remain wary of AI taking the wheel on home loans, even as brokers and lenders quietly increase behind-the-scenes adoption. The trust gap is the core blocker — and it’s solvable. ...Read more
Loans
Underserved by design: A case study in turning FBAA broker density gaps into growth
Fresh FBAA data confirms broker headcount is rising past 22,000, yet coverage remains uneven — with concentrations in NSW and Victoria and pockets the association identifies as underservedRead more
Loans
The new shadow lender: How the ‘Bank of Mum and Dad’ is redrawing Australia’s first-home buyer market
Parental capital has become a decisive force in Australia’s housing market, accelerating deposits, lifting bidding power and creating a two‑speed pipeline of first‑home buyers. This isn’t a feel‑good ...Read more
Loans
The effortless edge: How Australian brokers turn retention into a compounding growth engine with AI and specialisation
Australia’s broking market is crowded, digital-first and unforgiving on acquisition costs. The growth story now is retention—engineered through low-effort client experiences, AI-enabled servicing and ...Read more
Loans
State Street: RBA holds rates at 3.6% as hawkish tone emerges
State Street has said the Reserve Bank of Australia’s (RBA) decision to hold the cash rate at 3.6 per cent reflects a more hawkish policy bias, signalling that the central bank is likely to keep rates ...Read more
Loans
The effortless edge: How brokers turn low-friction service into high-retention value
Client retention in broking is no longer about squeezing a better rate at renewal. It’s about building an ‘effortless’ experience that anticipates needs, removes friction, and compounds loyalty across ...Read more
Loans
Fixing the future: How brokers and lenders can turn rate-hike anxiety into strategic advantage
Australian borrowers are leaning into short-term fixed loans as rate uncertainty lingers, shifting risk from households to lenders and their funding partners. That creates a narrow window for broker ...Read more
Loans
Mortgage mania: Why sluggish turnaround times are the new battleground in booming loan demand
Brokers across Australia are flagging loan processing delays precisely as borrower activity rebounds — a dangerous mismatch for lenders competing on service as much as price. The operational lesson is ...Read more
Loans
Why AI isn't penning Aussie mortgages yet trust trumps tech
Australian borrowers remain wary of AI taking the wheel on home loans, even as brokers and lenders quietly increase behind-the-scenes adoption. The trust gap is the core blocker — and it’s solvable. ...Read more
Loans
Underserved by design: A case study in turning FBAA broker density gaps into growth
Fresh FBAA data confirms broker headcount is rising past 22,000, yet coverage remains uneven — with concentrations in NSW and Victoria and pockets the association identifies as underservedRead more
Loans
The new shadow lender: How the ‘Bank of Mum and Dad’ is redrawing Australia’s first-home buyer market
Parental capital has become a decisive force in Australia’s housing market, accelerating deposits, lifting bidding power and creating a two‑speed pipeline of first‑home buyers. This isn’t a feel‑good ...Read more
Loans
The effortless edge: How Australian brokers turn retention into a compounding growth engine with AI and specialisation
Australia’s broking market is crowded, digital-first and unforgiving on acquisition costs. The growth story now is retention—engineered through low-effort client experiences, AI-enabled servicing and ...Read more
Loans
State Street: RBA holds rates at 3.6% as hawkish tone emerges
State Street has said the Reserve Bank of Australia’s (RBA) decision to hold the cash rate at 3.6 per cent reflects a more hawkish policy bias, signalling that the central bank is likely to keep rates ...Read more
Loans
The effortless edge: How brokers turn low-friction service into high-retention value
Client retention in broking is no longer about squeezing a better rate at renewal. It’s about building an ‘effortless’ experience that anticipates needs, removes friction, and compounds loyalty across ...Read more
