MFAA says many borrowers will continue to make higher mortgage repayments, despite the RBA cutting rates by 1% yesterday.

“Unless they are experiencing financial difficulty, mortgage holders prefer to continue making higher loan repayments so they can pay off their debt sooner rather than later,” said MFAA CEO Phil Naylor.

Based on an average national loan size of $264,000, a borrower can save almost $174 a month, provided their lender passes on the full rate cut.

Naylor said MFAA research showed that anywhere from two thirds to three quarters of mortgage holders still prefer to make higher repayments with the aim to pay off their mortgage quicker.

“Obviously, borrowers that are experiencing more difficultly are using the money saved as a result of the drop in rates to cover their daily requirements,” he added.

Future rate cuts, he said, would depend on the RBA’s assessment of the economy and how effective the last few drastic interest rate adjustments have been.

“The difficulty the Reserve has is that the decision made yesterday may take a month or even six weeks before its impact on the economy is able to be assessed,” Naylor said.