Interest rate cuts going to our loans, not pocket
18/02/09 02:53 PM
MORTGAGE
holders are taking advantage of lower interest
rates to pay off their loans faster, rather than
pocketing the savings upfront. This has prompted
some economists to call for automatic reductions to
monthly loan repayments to help better stimulate
the economy.
Some lenders do automatically reduce mortgage repayments in line with interest rate cuts but the default position of most banks is to maintain repayments at previous levels and then offer people the option to reduce repayments.
Some lenders do automatically reduce mortgage repayments in line with interest rate cuts but the default position of most banks is to maintain repayments at previous levels and then offer people the option to reduce repayments.
Minutes from
the latest Reserve Bank board meeting, released
yesterday, show board members thought that
"households had not as yet scaled back their loan
repayments after recent falls in interest rates,
preferring instead to pay off debt faster".
So while there had been "a very significant macroeconomic stimulus" from interest rate cuts and the Government's $42 billion spending package, "this stimulus would take time to be effective and could be expected to have only a modest effect on the near-term outlook in Australia".
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So while there had been "a very significant macroeconomic stimulus" from interest rate cuts and the Government's $42 billion spending package, "this stimulus would take time to be effective and could be expected to have only a modest effect on the near-term outlook in Australia".
Full Story