The Reserve Bank of Australia (RBA) may have taken its foot the interest rate brake too soon, when it cut rates earlier this week, a debt collection agency says.

Prushka Fast Debt Recovery chief executive Roger Mendelson said consumers could use the rate cut as an excuse for a spending splurge and rack up more personal debt.

“The interest rate cut was premature,” Mr Mendelson said.

“Based on the evidence from our own database, it indicates there is no crisis and we are long way from that.”
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Home loan repayments and rent are hurting struggling borrowers much more than high petrol prices, data from Australia’s largest privately owned debt collection agency shows.

Unleaded fuel prices were approaching $1.70 in Adelaide, Melbourne, Sydney and Canberra yesterday even before crude oil prices reached a record $US145 a barrel.

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The decision today by the central bank to leave official interest rates unchanged was a welcome reprieve for home owners experiencing mortgage stress, Wizard Homes Loans chairman Mark Bouris says.

“Without being melodramatic, today’s rate reprieve will mean many of these people can continue to keep their heads above water,” he said in a statement.

The Reserve Bank of Australia (RBA) board met today and left the cash rate at 7.25 per cent. Full Story