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ISCOVER
Staff Reporter
Australian home owners are taking advantage of the latest rate cuts, with the majority putting the extra savings towards the principal loan.
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A new poll by PRDnationwide found 68 per cent of borrowers will pay down their mortgage sooner thanks to the two rate cuts in November and December 2011.
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 next 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."
