Login
ISCOVER
Most mortgagees will use falling interest rates to repay their home loan faster rather than spend the extra savings, according to new research by CUA.
The group’s National Mortgage Survey revealed 77 per cent of participants with a home loan were “likely” or “very likely” to make extra repayments if their mortgage repayments decreased as a result of falling interest rates.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
Furthermore, over half of the participants stated they were “likely” or “very likely” to put extra money into savings, while only five per cent said they were “very likely” to treat themselves to a luxuries such as holidays and dining out.
Investing in the extra cash was the least popular option, with three quarters of participants revealing they were unlikely to put their money into investments, such as shares or investment funds.
CUA head of product Mark Petty said the results showed that Australian home owners are taking a sensible approach when it comes to paying down debt, rather than spending.
“It’s not surprising that many Australians are making the most of our record-low interest rates to try to get ahead on their home loans and to put some extra cash aside as a buffer,” he said.
“Mortgage borrowers are very debt focused and want to get ahead financially by repaying their mortgage as quickly as possible, which is a responsible thing to do.
“The current low interest rates are helping people along that journey.”
The survey also showed significant uncertainty surrounding interest rates, with around one in four participants stating they were unsure about the interest rate outlook.
Twenty-five per cent of participants said they expect an increase by the end of the year, while a further 25 per cent expect a decrease, and 22 per cent expect no change.
“People are watching interest rates closely and opinion on where they are heading is divided,” Mr Petty said.
“The survey also showed that one in seven people with a variable interest rate mortgage were planning on moving to a fixed interest rate within six months.
“We would expect the number of home owners looking at that option will continue to increase in the coming months, particularly given the uncertainty about future rate changes.”
[Related: More consumers taking advantage of low rates]
