Borrowers smash home loan debt

HOME loan customers are surging ahead on their repayments and new figures show some borrowers are nearly three years ahead.

EXCLUSIVE

MORTGAGE customers are pumping extra cash into their home loan repayments with new figures showing many borrowers are now nearly three years ahead.

Data released by the nation’s big four banks shows customers are smashing down their home loan debts — with the nation’s largest lender, the Commonwealth Bank confirming three in four customers are 33 repayments ahead on average.

Most CBA borrowers make monthly repayments and the overpayments includes cash held in offset accounts (day-to-day transaction accounts linked to a home loan).

The Reserve Bank of Australia meets again on Tuesday and it’s strongly tipped they will keep the cash rate on hold at 1.5 per cent.

But borrowers are being warned not to be complacent about attacking their mortgage debt while interest rates remain below the four per cent mark.

The Reserve Bank of Australia dropped the cash rate to 1.5 per cent in August.

Figures from National Australia Bank shows their home loan customers on average are more than 15 months ahead.

The bank’s general manager of home lending, Meg Bonighton, said they have continued to see customers pay extra in recent years.

“Four years ago the average home loan account was 12 months ahead on its repayments and today it’s almost 15 months ahead,’’ she said.

“When interest rates are reduced, the monthly repayment amount remains the same unless the customer requests to change it.”

At Westpac three in four customers are ahead while at ANZ two in five customers are at least one month ahead.

Data from financial comparison website RateCity shows on a $300,000, 30-year home loan the standard variable rate is 4.62 per cent and monthly repayments are $1542.

On a three-year fixed deal the average rate is 4.16 per cent and repayments are $1462.

Mortgage Choice spokeswoman Jessica Darnbrough urged borrowers to overpay their loans by as much as possible in the low-rate environment.

Mortgage Choice spokeswoman Jessica Darnbrough said borrowers should be overpaying their mortgage while they can.

“If you had a $500,000 principal and interest home loan with an interest rate of four per cent and you contribute an additional $200 a month to your mortgage, you could not only shave over four years off your mortgage, but you will save yourself more than $55,000 in interest.”

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Originally published as Borrowers smash home loan debt