Australians are using lower interest rates to repay debt instead of saddling up for more borrowings, a mortgage lender says.

Resi Mortgage head of consumer advocacy Lisa Montgomery said there had been an eight per cent increase in those wanting to consolidate debt, among the 700 customers surveyed about the future for their finances.

Since September, the Reserve Bank of Australia (RBA) has cut official interest rates by four percentage points to a 45-year low of 3.25 per cent, while banks have lowered their standard variable mortgage rate by an average 3.75 percentage points.

“Most people were displaying a conservative approach, but really wanted the opportunity to take advantage of the lower interest rates,” Ms Montgomery said.

“People in the short-term are looking to be prudent, but in the long term they really want to take advantage.”

Six per cent of respondents said they would use the lower rates to take on extra financing to improve their home, while there was a nine per cent fall in those planning to buy a new family house and a 11 per cent decrease in those planning to buy an investment property, the survey said.

The rate cuts since September meant borrowers were $774 a month better off on a $300,000 mortgage taken for 25 years, Ms Montgomery said.

“The pressure is off there, but they have become more prudent,” she said.

“There is still that idea in the back of the consumers’ minds that this is a not long-term interest rate environment.”

The RBA said in its half-yearly Financial Stability Review this week that the finances of some households had improved recently due to low interest rates.

“The ratio of interest payments to household disposable income is likely to fall from its peak of over 15 per cent to around 11 per cent in the March quarter 2009: a further decline should occur in the June quarter as the full effect of earlier falls in interest rates flows through,” the RBA said in the review.

The RBA noted a change in sentiment to a more cautious consumer over the past year.

“Spending on credit cards has slowed sharply, to be up only one per cent over the year to January 2009,” the central bank said.

“In contrast, spending on debit cards was up by more than 15 per cent over the same period.”

Ms Montgomery said customers were more informed about their finances with Resi receiving a spike in phone calls immediately after a RBA meeting when the board changed the cash rate.

“People will be asking, `What are you doing?’, as I am sure they do with other lenders and banks.

AAP