Most homeowners with Commonwealth Bank loans kept their monthly payments the same after the RBA reduced interest rates in August. Only 10% of borrowers chose to lower their payments. Even though living costs are high right now people seem to prefer staying ahead on their home loans instead of taking advantage of the lower rates. This shows that Australian borrowers are being careful with their money & want to build a safety net by paying more than they need to on their mortgages.
Most experts think the Reserve Bank of Australia will keep interest rates at 3.60% when they meet this week. The big banks have different views on when rates might go down. Three major banks – CBA Westpac and ANZ – predict the first rate cut will happen in November. NAB thinks rates won’t drop until May 2026. This is much later than what other banks expect. The decision will affect many Australian homeowners who have mortgages. The RBA wants to make sure inflation is under control before they lower rates.
Mary Cameron from Cameron Capital spoke to Yahoo Finance about home loans. She said homeowners should keep paying the same amount even when interest rates drop. This helps people pay off their loans faster. Instead of lowering payments when rates go down keeping them steady means more money goes toward the actual loan. This method helps homeowners clear their debt sooner than expected.
The Commonwealth Bank looked at how people handled their home loans after interest rates dropped in August. Only 11% of borrowers chose to pay less on their mortgages. This was a bit higher than what happened after rates went down in February & May.
New homeowners were more careful with their money as only 8% of them lowered their payments. People between 31 & 40 years old made the most changes with 14% of them deciding to reduce their monthly payments. The bank noticed that most customers kept paying the same amount even though they could have paid less.
Most people kept paying the same amount on their home loans even when interest rates went down. Young homeowners between 31 and 40 years old were more likely to lower their payments.
Only 11% of people aged 21 to 30 reduced their payments & just 9% of those aged 51 to 60 did the same. Bank manager Marcos Meneguzzi noticed this pattern happening after each rate cut this year.
He said the number of people who chose to pay less stayed about the same each time rates dropped even though they could have saved more money. Homeowners with a typical $500000 loan will save $240 each month thanks to the three rate cuts.
How much extra money could pensioners actually save by keeping repayments unchanged?
A CommBank study shows most people are doing well with their home loans. About 85% of their customers have paid more than required. These customers are about 32 months ahead on their payments.
When it comes to lower payments Westpac does things differently. They automatically reduce the monthly payments for customers who pay the minimum amount. The other big banks don’t do this. If you have a loan with CBA NAB or ANZ you need to call them to get your payments lowered.
Many homeowners kept their loan payments unchanged after interest rates dropped in May. NAB reported that only 10% of their borrowers changed their payment amounts. ANZ had similar results with just 11% of customers adjusting their payments. Bank officials mentioned that customers can still lower their monthly payments whenever they want. They can do this easily through their banking app or website.
If you keep paying the same amount on your home loan each month even when rates drop, you can save a lot of money. Let’s look at an example. A person has a $600,000 home loan that would take 25 years to pay off.
When interest rates went down three times, they didn’t lower their monthly payments. Instead they kept paying the same amount. This smart move helped them save $76536 in total interest. Plus they finished paying their loan more than three years early. This shows how sticking to higher payments when rates drop can really pay off in the long run.
If you have a million-dollar mortgage you can save $127560 in total interest by not lowering your payments when rates drop. This also helps you finish paying off your home 3 years and 3 months earlier.
You can save even more money by switching from monthly to weekly or fortnightly payments. It’s also smart to put extra money toward your mortgage when you get it.
This includes things like tax refunds or work bonuses. Even rounding up your regular payments to the next hundred dollars makes a big difference over time. These small changes help you become debt-free faster and save a lot of money on interest.
How has the Commonwealth Bank responded to borrowers after RBA rate cuts?
Revealed $76,500 repayment trend.
