Fed: Rate cuts lifting the spirits of consumers

AAP General News (Australia)
12-10-2008
Fed: Rate cuts lifting the spirits of consumers

CANBERRA, Dec 10 AAP - Big cuts in interest rates have lifted the spirits of consumers
and prompted renewed interest for home loans.

Falling petrol prices - down 18 per cent in the past month - are also helping consumers
buck gloomy prospects for the economy.

New data released on Wednesday shows consumer confidence jumping 7.5 per cent in December
on the back of Reserve Bank interest rate cuts, totalling 300 basis points in the past
four months.

The Westpac-Melbourne Institute consumer confidence index has now risen more than 16
per cent from this year's low point.

"The good news on interest rates is finally getting some traction," Westpac chief economist
Bill Evans said.

With banks passing on about 2.7 per cent of the three per cent cut households were
responding, he said.

The survey found confidence among mortgage-holders surged 11 per cent in December compared
to 1.6 per cent for tenants.

New home loans rose by a seasonally-adjusted 1.3 per cent to 48,299 in October, ending
eight months of consecutive falls, the latest Australian Bureau of Statistics data shows.

AAP cb/rl/ss

KEYWORD: ECONOMY DATA

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