Borrowers keen to clear their debts

30 Oct 2012, 2:39 pm   -   Source: AAP

CBA boss Ian Narev says home owners are taking advantage of rate cuts to pay off their loans faster, not reduce their repayments.

Commonwealth Bank chief executive Ian Narev says bank customers are taking advantage of rate cuts to pay off their mortgages faster, rather than reducing their repayments.

Mr Narev, speaking to reporters after CBA's annual general meeting in Sydney on Tuesday, said he could not comment on future interest rate moves.

But he said the bank had found customers did not use rate cuts to reduce their immediate home loan costs.

"That isn't a question of whether you pass on 25 basis points, 20 or 18, that is a function of what individuals are choosing to do, which is to accelerate repayment of debt," Mr Narev said.

He also said he had confidence in the Reserve Bank's decisions on rates, and was not concerned that recent cuts had not translated to a boost in economic activity.

"In these sorts of economies where people are looking northward and seeing a lot of ongoing volatility, it would be wrong to assess the wisdom of any particular RBA move based on what happens in two weeks or a month later, it's a much longer game than that," he said.

Earlier, the CEO told shareholders it was unlikely economic conditions and consumer sentiment would change in the near term.

"We continue to see high degrees of global uncertainty and they continue to translate in Australia to lower credit growth, higher savings rates, more nervousness regarding investments," Mr Narev said.

"But we remain very confident about the prospects of the Australian economy in the medium to long term, and indeed in the other economies such as Indonesia and China in which the Commonwealth Bank Group has interests."

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