How much a Melbourne Cup rate cut could save you

Homeowners with an average mortgage could save $100 a month if the Reserve Bank cuts interest rates today.

Homeowners with an average mortgage could save $100 a month if the Reserve Bank decides to cut interest rates at its Melbourne Cup meeting today.

That means repayments on an average-sized home loan of $642,121 with a typical mortgage rate of 6.21 per cent would drop to $3843 a month from $3947 over the life of a 30-year loan.

In Sydney, where the highest average mortgage is a whopping $3.7m in Double Bay, homeowners currently paying around $22,695 a month could save nearly $600 a month or about $7200 a year.

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Martin North is the CEO and founder of Digital Finance Analytics. Photo: Hollie Adams.

All economists surveyed by comparison site, Finder, believe the RBA will hold the cash rate at 4.35 per cent in November.

Even if there is a rate cut, it may not be enough to pull them some mortgage holders back from the financial brink, with new data showing homeowners in nearly 90 postcodes have a whopping $1m or more left to pay off their mortgages.

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Exclusive data from Digital Finance Analytics (DFA) shows the average mortgage holder in nearly a quarter of Sydney’s postcodes owes more than $1m on their loans, while outstanding debt of more than $800,000 is the norm for mortgagors in about a third of the market.

The Reserve Bank is expected to leave interest rates on hold when it meets in November.

There were also just 16 postcodes where the average amount of mortgage debt was less than $300,000 — nearly all of which were more than 50km from the Sydney CBD.

DFA data scientist Martin North said the amount of debt homeowners had relative to their incomes was staggering in many areas.

“The amount of debt we compared to incomes makes us massive outliers compared to the rest of the developed world,” Mr North said.

This three-bedroom house at 16 Glendon Road, Double Bay, recently sold for $6.55m.

“If we are still in the same boat in 12 months, with rates as high as they are, we will have households spending too much on servicing debt. That’s going to reduce momentum in the economy.”

In Victoria, the data shows homeowners in some of Melbourne’s lower socio-economic suburbs are doing a better job of paying their mortgages than some of the city’s wealthiest enclaves.

In affordable suburbs like Melton and Frankston the average mortgage debt is less than a fifth of the median house price, but in million-dollar postcodes like Toorak and Brighton, the typical mortgage is a whopping $2.37m and $2.153m, respectively.

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This three-bedroom house at 184 Kooyong Rd, Toorak, recently sold for $6.4m.

There were 20 Melbourne suburbs with an average mortgage above $1m, and 59 areas across Victoria where the typical loan was higher than the state’s $604,839 average, according to the Australian Bureau of Statistics.

It’s a slightly different story in Queensland, where homeowners in more than 20 suburbs owe more than $500,000 on their mortgages, but some of the state’s most popular inner-city hotspots are missing from the top 50 ranking — suggesting high-net-worth buyers are paying cash for prestige homes.

But Queensland’s average mortgage of $297,851 trails New South Wales at $523,905 and Victoria at $342,081. Paying off a loan in Queensland was also cheaper than in Western Australia and the ACT.

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This three-bedroom house at 6 Sirdar St, Melton, recently sold for $510,000.

The affluent inner-north Brisbane suburb of Ascot tops the list with an average mortgage of $1.38m.

Once-affordable areas where prices have skyrocketed are also carrying heavy debts, including Albany Creek and Kuraby in Brisbane, and Miami and Robina on the Gold Coast.

Homeowners in both the Adelaide Hills and leafy city fringe were the most in arrears in South Australia, with Hahndorf residents having the highest amount outstanding on their mortgages of $1.022m.

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This house at 12 Pine Valley Dr, Robina, recently sold for $1.48m.

Summertown, also in the Adelaide Hills, came in second, owing $754,000, followed by Linden Park and Unley Park.

Turner Real Estate managing director Lachlan Turner said he hoped to see lending conditions ease in the coming months, which could make it easier for people to pay down their mortgage quicker.

“Inflation is now more within the target range, sitting between that 2 per cent and 4 per cent, which is a big deal because that’s what will bring down interest rates,” he said.

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