Mortgage Choice said the following would apply on a standard $300,000 loan:
If the cut is passed on in full by the lender of a fairly standard borrower – someone who owes $300,000 at the average standard variable rate of 6.99% over a 30 year term – the difference in the mortgage repayment level is about $197 per month. This borrower’s minimum repayment level will have reached about $1,797 per month.
If 75 basis points are passed on, the repayment level difference is $148.69 per month.
If the borrower ignores a 100 basis point rate cut and continues paying at their ‘usual’ repayment level, the extra $197 per month would eventually save them approximately $89,962 plus six years and nine months off their loan.
“All borrowers should take note: if your lender hasn’t passed on the vast majority of the 400 basis points cash rate decrease we’ve experienced since September 2008 then research your mortgage options right now. There is a wide range of attractive lenders and loan products available, and switching loans could save you money”.