Only 14% of eligible home loan customers adjusted their direct debit repayments following the 0.25% rate cut in February, according to new data from Commonwealth Bank.
The rate reduction delivered potential monthly savings of up to $80 for principal and interest customers with a $500,000 average loan size. However, the vast majority of borrowers opted to leave their repayment settings unchanged.
Michael Baumann (pictured), CommBank’s home buying executive general manager, explained that the bank gives borrowers flexibility.
“Homeowners appreciate the flexibility to make financial choices that suit their current and future goals, and we offer eligible home loan customers the option to reduce their direct debit repayments or leave it untouched,” Baumann said.
“Following February’s rate cut, around 14% of eligible customers took this opportunity to reduce their direct debit to align with the lower repayment—thereby freeing up their current cash flow.”
The findings come as Australia’s housing market shows renewed confidence, with refinancing, investor lending, and first-home buyer activity all rising following February’s cash rate cut.
For the 86% who did not lower repayments, Baumann said they may now be making additional mortgage repayments, which could help them reduce their loan term.
“These additional payments will also increase the available balance of their loan accounts and customers may have the flexibility to redraw the available balance at any time, for example if they experience an unexpected cost,” he said.
More than 95% of customers who chose to adjust their mortgage repayments did so digitally—through the CommBank app or NetBank. Others opted to make changes by calling or visiting a branch.
CommBank, which is also deepening its push into business lending, is encouraging customers to take control of their repayments using its digital tools.
“We aim to make our self-service options the best digital banking experience in Australia, with flexibility, convenience and security,” Baumann said.
“The good news is eligible home loan customers do not need to wait for further rate reductions to change their mortgage direct debits; they can make real-time adjustments in alignment with their unique and ever-evolving circumstances.”
Looking ahead to today’s Reserve Bank cash rate decision, Baumann said more customers are likely to reduce repayments if rates fall further.
“If rates fall further, it could deliver greater total savings to eligible home loan customers,” Baumann said. “As such, I wouldn’t be surprised to see more home loan customers choosing to free up their cash flow by lowering their regular mortgage repayments.”
CommBank reminded borrowers that they can check their current minimum repayment amount and adjust direct debits at any time using their digital platforms.
