December 04, 2012
Australia's largest independently-operated mortgage broker, Mortgage Choice, hopes today's decision by the Reserve Bank of Australia to cut the cash rate by 0.25 percentage points, to 3.00%, will bring additional Christmas cheer to borrowers and spur positive consumer and business sentiment this festive season.
“We hope the decision by the Reserve Bank of Australia to cut the cash rate this month translates into a noticeable up-tick in consumer and business confidence. This has remained subdued for more than twelve months now, despite previous cuts to the official cash rate this year,” said Mortgage Choice Head of Corporate Affairs, Belinda Williamson.
“The expectation is that the cash rate cut will act as a welcome counter-weight to any near-term rises in unemployment and be the much-needed trigger to stimulate economic growth in the retail, manufacturing and housing markets as we head into the New Year.
“For those taking the leap into the property market or repaying a home loan, the rate cut this month may seem like an early Christmas present, particularly if lenders pass the cut on in full to borrowers. But as we all know, lenders' decision to cut rates is never a certainty, so borrowers should check to see what action their lender takes and how this impacts their loan situation.”
Ms Williamson went on to say that the rate cut decision is a timely reminder to spend within your means.
“December and January can be expensive months – with presents to buy and a multiple of social occasions to attend, the wallet can get a serious workout. With this in mind, it is no surprise that another interest rate cut is welcomed by consumers, businesses and the retail sector, which is heavily reliant on spending to see them through this period,” said Ms Williamson.
“With Christmas spending top of mind this month, there are many ways to ensure you stay out of the red this festive season, and even make savings on your home loan and other financial commitments. The trick is to spend a little but to keep the costs within your means.”
She listed three top tips from Mortgage Choice to avoid the stress of over-spending this silly season:
1. Create a holiday season budget: This will allow you to clearly see how much money you realistically have to spend on gifts and celebrating this Christmas. By going through the process of writing down all your expenses, you may even find there are areas of your budget that you can cut back on and save. If you do have the luxury of some extra money in your pocket, consider making additional repayments to your home loan to help reduce the loan term and the interest payable.
2. Spend within your means: With a rate cut up your sleeve it can be tempting to get carried away spending more than you can truly afford on gifts for friends and family. Avoid starting the New Year with additional debts by steering clear of credit card or store card spending and interest-free loans. This will help you to keep costs under control and it also means that your regular commitments, such as your loan repayments, won't suffer at the expense of over-spending.
3. Plan for the New Year: If each year the silly season takes its toll on you financially, consider putting plans in place now so you don't find yourself in the same situation. Putting aside a small amount of money each week will help when you need an extra injection of spending money these holidays. When it comes to your home loan, the New Year might be the perfect time to review your current home loan to see if you can cut costs further by negotiating a better deal, or finding a better offer elsewhere.
For further information or to arrange an interview, please contact:
Mortgage Choice Corporate Affairs
(02) 8907 0472 / 0407 416 124
(02) 9018 8603 / 0412 550 004