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Few spending more despite rate cuts
Few spending more despite rate cuts

Retailers hoping that two consecutive months of interest rate cuts will prompt consumers to lift their spending habits may be disappointed.

A new survey by mortgage provider Loan Market has found that just 15 per cent of consumers are spending the extra cash from reduced loan repayments as a result of interest rate cuts in May and June.

"While consumers and home owners are always looking for interest rate relief, the latest round of cuts has yet to influence the cautious and subdued mindset of Australians," Loan Market corporate spokesman Paul Smith said.

The online poll of 813 respondents found 30 per cent said the two rate cuts that took the Reserve Bank of Australia's cash rate to 3.25 per cent had made no difference to their spending.

The malaise was even more pronounced among so-called Generation-Y respondents. Half of this group said the cuts made no difference to their spending.

Just 7 per cent of all respondents, and four per cent of Gen-Yers, said they were using funds from reduced repayments to pay off more of their mortgage.

About half of all respondents (48 per cent) and a third (32 per cent) of Gen-Yers said more rate cuts were needed.

Mr Smith while the cut in interest rates would have been helpful, the pressure was on the RBA to cut further.

The central bank will hold its monthly board meeting next Tuesday.

Financial markets see only a slim chance of another cut at the July meeting, but believe there's a strong chance of a move in August after the latest official inflation report is released on July 25.