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Date Published : Thursday, March 13, 2008
Rising interest rates are putting people off taking out credit cards, while a rush of homeowners are trying to agree mortgages before the next interest rate rise, federal government figures have suggested.
The amount of credit card agreements signed in January dipped by eight per cent on December as the affects of the recent credit crunch, along with higher interest rates, slowed consumer spending.
Overall, the figures from the Australian Bureau of Statistics (ABS) show that personal finance spending increased by 0.1 per cent in January.
Meanwhile, a 1.7 per cent increase in the amount of money borrowed for home purchase was registered nationally, as the search for home loan bargains intensified.
The ABS stated that it predicted home loan borrowing to intensify, as homeowners search for the best deals after the latest interest rate rise.
Earlier this month, the Reserve Bank of Australia increased interest rates to 7.25 per cent - the highest level for over 12 years and the first back-to-back monthly raise since 2003.
CommSec equities economist Savanth Sebastian told the Australian Associated Press: "Consumers that do own credit cards are not utilising their credit card to the maximum level available.
"Consumers are really cutting down on spending and looking at their budgets to fund more necessities than luxury items."
JPMorgan economist Helen Kevans told the news agency: "Borrowers rushed in to secure housing finances amid widespread speculation that the Reserve Bank would hike interest rates in February."
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