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”.
About the author
About the author
Loans
Government eases back responsible lending laws
The Morrison government wants to roll back credit standards set a decade ago to help aid in the national recovery. ...Read more
Loans
Banks slash rates prior to October cash call
Three of Australia’s largest financial institutions have all cut their variable rate charged on mortgages as speculation increases for an October cash rate cut. ...Read more
Loans
Looking for a loan pre-approval? Here are 5 things you need to know
Applying for a mortgage pre-approval can be a real boost for anyone looking to purchase property – but it’s important that would-be home owners do have a good understanding of what a pre-approval ...Read more
Loans
The remarkably simple way to pay off your mortgage sooner
For those looking to get out of debt quicker, a mortgage broker has explained a remarkably simple trick to pay off a home loan sooner. ...Read more
Loans
4 little-known benefits of using a mortgage broker
Mortgages can be confusing at the best of times. Add in a myriad of lenders offering different rates with various benefits, plus an extremely cautious banking system, and it may be easier to get an e...Read more
Loans
Big 4 bank estimates 15k customers cannot pay mortgage
One of Australia’s big four banks has estimated that up to 15,000 of its mortgage customers may not be able to resume repayments, as the bank begins a two-month engagement process to assess the impa...Read more
Loans
Banks call customers as mortgage deferral period ends
A small but growing number of borrowers who have put their mortgage or business loan on hold during the COVID-19 pandemic are beginning to pay their debts as the first six-month deferral period comes ...Read more
Loans
How risky is Australia’s household debt?
The central bank has warned house prices could plummet in the event of severe economic slowdown, but it would only trigger a small increase in the share of mortgages at risk of defaulting. ...Read more
Loans
Government eases back responsible lending laws
The Morrison government wants to roll back credit standards set a decade ago to help aid in the national recovery. ...Read more
Loans
Banks slash rates prior to October cash call
Three of Australia’s largest financial institutions have all cut their variable rate charged on mortgages as speculation increases for an October cash rate cut. ...Read more
Loans
Looking for a loan pre-approval? Here are 5 things you need to know
Applying for a mortgage pre-approval can be a real boost for anyone looking to purchase property – but it’s important that would-be home owners do have a good understanding of what a pre-approval ...Read more
Loans
The remarkably simple way to pay off your mortgage sooner
For those looking to get out of debt quicker, a mortgage broker has explained a remarkably simple trick to pay off a home loan sooner. ...Read more
Loans
4 little-known benefits of using a mortgage broker
Mortgages can be confusing at the best of times. Add in a myriad of lenders offering different rates with various benefits, plus an extremely cautious banking system, and it may be easier to get an e...Read more
Loans
Big 4 bank estimates 15k customers cannot pay mortgage
One of Australia’s big four banks has estimated that up to 15,000 of its mortgage customers may not be able to resume repayments, as the bank begins a two-month engagement process to assess the impa...Read more
Loans
Banks call customers as mortgage deferral period ends
A small but growing number of borrowers who have put their mortgage or business loan on hold during the COVID-19 pandemic are beginning to pay their debts as the first six-month deferral period comes ...Read more
Loans
How risky is Australia’s household debt?
The central bank has warned house prices could plummet in the event of severe economic slowdown, but it would only trigger a small increase in the share of mortgages at risk of defaulting. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
