Reserve Bank Cuts Interest Rates
The reserve bank has cut interest rates by 0.25% to 7%.
The question is what do you do now? Do you lower your repayments on your mortgage? Or keep them at your current level? Is it worth it?
The difference it will make to a morgage payment is $17 a month per $100,000 of mortgage (so if you have a $200k mortgage it’s $34 a month). The average mortgage of $250k will have the repayments reduced by $42 a month. Will $10.50 make a difference to your weekly budget? If you’re truly struggling it might. If you’re coping well with increased interest rates, fuel, food and all the other expenses that continue to rise, is it worth it to pay the extra off your mortgage?
On a $250k mortgage at 7% for 25 years, that extra $10.50 a week will save you 1 year and 5 months, and nearly $20k in interest. On a 30 year mortgage it will save 2 years and 3 months and over $32k in interest.
Ultimately what you do is up to you, but if you don’t need that $10 a week you may be better off leaving your repayments as they are.
Our loan is hovering around $84k at the moment, so the $4 a week we would save by lowering our repayments wouldn’t do much for us even if we were struggling.
