News and Media

24 November 2011

Making the most of the interest rate cut

Extra mortgage repayments are the big winners from the November interest rate cut, with 46% of Australians saying that they plan to use the cut to pay their home loans off faster.

Ongoing economic uncertainty has prompted many households to batten down the hatches by reducing debt and saving more.

According to the exclusive yourmoney.com.au online poll, a further 38% say they plan to use the rate cut to beef up their savings. Another 13% say they will bring their purchase plans forward as the rate cut means they can now buy a house.

Resi Mortgage chief executive Lisa Montgomery says the global economic crisis has created an "information overload" for many people.

'Borrowers are now living in a 24-hour news cycle where there's a running commentary on what's happening economically and what that may mean for interest rates,' she says.

'All this minute-by-minute information is distracting borrowers from being definitive about their finances and sticking to a plan.

'Homebuyers should focus on their original long-term plans, regardless of the short-term market conditions,' she says.

'When you boil it down, all the talk comes down to just two main areas whether or not you fix your interest rate or have it variable. The overriding factor should be if you want flexibility or not.'

Reproduced in full with permission: news.com.au, Karina Barrymore, 'Making the most of the interest rate cut' 21 November 2011