Borrowers drive down debt

Economic uncertainty is spurring increasingly prudent behaviour among borrowers as they focus on debt reduction.

According to a survey conducted by Loan Market, more than a third of borrowers are continuing to maintain pre-rate cut home loan repayments in order to pay down their home loan sooner.

And reducing other debt is also a priority among home owners, with 9% stating they were using the extra cash to pay off their credit card.

Only 6% of respondents said they were using the surplus cash to spend.

The results of the survey coincide with the release of ABS data which shows Australian households’ savings reached the highest level in the December 2008 quarter since 1990.

The figures showed that Australian families saved $9.5 billion in the December 2008 quarter, while consumption rose by less than 0.1 per cent, as buffering against the economic slowdown takes precedence across the country.