Interest rate cut too late for many

Thousands of consumers have seen the interest rate cut come too late, as new figures from the Insolvency and Trustee Service Australia (ITSA) show an increase in bankruptcies and insolvencies.

Statistics from ITSA cover the quarterly period up to March 2009, during which the February meeting of the Reserve Bank Board saw an interest rate cut of one percentage point implemented.

This followed a previous one percentage point rate cut in December 2008, which may have reduced the availability of high interest savings, but was not enough to prevent bankruptcy for many consumers.

During the quarter, more than 7,000 bankruptcies were entered into, an increase of 7.75 per cent on the previous three months and 13.66 per cent over the previous year.

Personal insolvency activity was greater at 9,300 individual cases or an 18.25 per cent year-on-year change.

More than 2,000 people also entered into Part IX agreements for the elimination of debt after reaching a position where they were unable to meet their outgoings on borrowings without becoming insolvent.

This article is brought to you by Mozo – Helping you compare interest ratesADNFCR-1761-ID-19122404-ADNFCR