The Finance Brokers Association of Australia (FBAA) has urged borrowers to keep their repayments at current levels despite the Reserve Bank of Australia’s move to cut rates by 25 basis points.

FBAA managing director Peter White has welcomed the first cut in nearly three years and called on the big banks to do the right thing and immediately pass it on rather than boosting their profit margins.

“If the banks refuse to pass this on in full they will reveal they have learnt nothing from the royal commission process,” Mr White said.

However, with economic challenges on the radar Mr White is urging beneficiaries of the rate cut to keep their repayments at current levels to drive down debt.

“Borrowers will effectively be saving for a rainy day if they keep their mortgage repayments as high as they can afford. It’s better to have payments in reserve if conditions deteriorate further.”

Mr White agreed with some economists that there had been some recent positive sentiment, certainly in the housing market but he acknowledged the Reserve Bank has limited capacity to stimulate the economy further with the official rate at 1.25 per cent.

“I understand why the Reserve Bank governor Philip Lowe has called for governments to play their part in stimulating the economy but I also see some positives.

“It’s not the time to panic but it is definitely time for prudence,” Mr White said.