INTEREST CUTS

Australian households are keeping their mortgage repayments on hold - and it could see them save in long-term interest costs.

The word is that 2025 could be shaping up to be a much better year for borrowers than 2024! Already, with the two rate cuts, and some experts are predicting some more to come.

Encouraging sign, I guess and maybe the worst of the cost of living maybe be behind us?

Smart home loan people are not taking up the short-term savings offered by the recent cuts, 86% of the variable rate borrowers with one particular lender have kept their minimum monthly home loan repayment amount at the pre rate cut level.

It is a simple step that could save on loan interest and help homeowners pay off their mortgage a lot sooner. 

However, the recent rate cuts may have released the pressure valve for many homeowners. For the average $500,000 home loan, February's 0.25% rate cut could have lowered the monthly repayments by up to $80.

The second rate cut in May could have trimmed a further $80 from monthly repayments.

Four months and a $160 wiped off the repayments, very few homeowners are reaching out to their lenders to reduce their monthly amount.

Obviously if your finances can cope with it leaving your minimum monthly repayment un change when the rates head south can be one way to help pay more off your loan each month.

On a $500,000 home loan assuming today's average variable rate of 6.42% and a 25-year term. By sticking with the same, pre-rate cut repayments for the remainder of the loan - equivalent of paying that $160 extra each month, a borrower could cut over $61,000 from their long-term interest bill. 2.5 years ahead of schedule. Now if the rates full further, the time and cost the savings could be higher.

Contact your finance provider to have a chat with them to see what works best for you.

MAKE YOUR OWN DECISIONS AND GIVE IT A REAL GO!!

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