logo
Commonwealth Bank issues urgent mortgage warning to Aussies: Do this to LOWER your repayments

Commonwealth Bank issues urgent mortgage warning to Aussies: Do this to LOWER your repayments

Daily Mail​8 hours ago
Australia's biggest home lender is urging borrowers to contact their bank if they want to trim their monthly mortgage repayments following an expected official rate cut tomorrow.
Financial markets are universally expecting the Reserve Bank of Australia to cut the cash rate on Tuesday by another 25 basis points, which would take it down to 3.6 per cent for the first time since May 2023.
But RBA rate cuts don't necessarily translate into lower monthly mortgage repayments unless a borrower contacts their bank, with an average borrower set to save $100 a month with each cut.
The Commonwealth Bank has revealed only 10 per cent of home borrowers chose to reduce their monthly direct debit mortgage repayments in May, when the RBA last cut rates.
Borrowers aged 31 to 50, who are more likely to be raising children and battling the cost-of-living crisis, were more likely to opt to reduce their repayments.
Investor landlords were also more likely to ask to cut their repayments, despite the tight rental vacancy rate.
Commonwealth Bank general manager of home buying Tess Sutherland said most borrowers preferred to keep their existing monthly repayments, following an RBA rate cut, so they could pay off their loan faster.
'One in ten eligible customers opted to lower their home loan repayments after the May rate cut, which is really similar to what we saw following February's cut,' she said.
'It shows only a small percentage of customers are freeing up their cash, while most are maintaining higher repayments to get ahead on their loans.'
Of those who chose to reduce their loan repayments, 39 per cent came from New South Wales, the home of Australia's most expensive property market, Sydney.
Ben Perham, Macquarie Bank's head of personal banking, said many borrowers battling the RBA's 13 hikes in 2022 and 2023 had forgotten about the process of asking for mortgage repayments to be lowered after RBA cuts.
'It's been a long time since a rate-cutting cycle and many Australians with a mortgage or savings account may need a rate cut refresher,' he said.
'The questions you need to ask your bank in a falling rate environment are different, and the answers they give you could cost you thousands.
'If you're not getting the best deal, it's time to switch.'
Borrowers can pay off the principal of their mortgage faster if they keep their repayments unchanged following an RBA rate cut.
Canstar calculated a borrower with an average, $660,000 mortgage would save $150,854 and be paid off six years earlier, on a 30-year loan, if they opted to keep repayments the same instead of reducing their repayments every time the RBA cut rates.
Sally Tindall, Canstar's data insights manager, said this was the best way to get ahead financially.
'Not automatically adjusting a borrower's direct debit in the event of a rate cut might seem, at first glance, unfair but it actually unleashes the potential for you to save tens of thousands – in some cases, hundreds of thousands – in interest charges if you can keep those higher repayments up for the life of the loan,' she told Daily Mail Australia.
'The bank will still automatically apply the rate cut, if they have announced it will be passing it on in full, but if your monthly repayments stay the same, the extra money you are no longer paying to your bank in interest charges will instead go into your home loan as an extra repayment, essentially helping you pay off your debt faster.'
Canstar calculated that staying with the same repayment would mean $503,444 in interest over the life of the loan instead of $654,298 - a saving of $150,854.
Headline inflation in the March quarter fell to just 2.4 per cent, putting it on the lower side of the Reserve Bank's two to three per cent target.
A monthly inflation measure for May showed the consumer price index falling even lower to 2.1 per cent.
Australia's Big Four banks, as a result, are all expecting a rate cut on Tuesday afternoon.
They had been expecting the RBA to wait until August, following the late-July release of June quarter inflation data.
The futures market is now expecting the RBA to cut rates in July, August, and again in November, which would take the cash rate to 3.1 per cent for the first time since February 2023.
A quarter of a percentage point rate cut on Tuesday would save a borrower with an average, $660,000 mortgage $106 a month on repayments, if they contacted their bank.
This would see monthly repayments fall from $4,081 to $3,975, as a popular CBA variable rate fell from 6.29 per cent to 6.04 per cent.
A borrower, however, can make even lower minimum monthly repayments of $3,645, but take longer to pay off their loan.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Mysterious 'cybercriminal' makes contact with Qantas a week after the data of SIX MILLION customers was stolen
Mysterious 'cybercriminal' makes contact with Qantas a week after the data of SIX MILLION customers was stolen

Daily Mail​

time40 minutes ago

  • Daily Mail​

Mysterious 'cybercriminal' makes contact with Qantas a week after the data of SIX MILLION customers was stolen

Qantas has been contacted by a hacker who has claimed responsibility for a huge customer data breach. Last week, the airline detected a hack that potentially compromised the names, dates of birth, email addresses and frequent flyer numbers of six million customers. Qantas have not disclosed whether the hacker, or any group they might be affiliated with, have demanded a ransom. A Qantas spokesperson told Daily Mail Australia: 'A potential cybercriminal has made contact and we are currently working to validate this. 'As this is a criminal matter, we have engaged the Australian Federal Police and won't be commenting any further on the detail of the contact. 'There is no evidence that any personal data stolen from Qantas has been released but, with the support of specialist cyber security experts, we continue to actively monitor.' The airline said earlier in July a third-party system used by an offshore call centre had been attacked two days earlier. Unusual activity detected on the third-party platform used by the airline's contact centre in Manila , prompted an investigation. Qantas confirmed the breach last Wednesday. The airline said no credit card details, personal financial information or passport details were held on the hacked platform. No frequent flyers accounts were compromised and Qantas stated the bread had been 'contained'. The airline warned customers to remain 'alert for unusual communications claiming to be from Qantas'. New security measures have been added for customers' frequent flyer accounts, including requiring extra identification for any charges. Since the attack was revealed, Qantas has received more than 5000 customer inquiries. 'I want to apologise again for the uncertainty this has caused,' chief executive Vanessa Hudson said. 'We know that data breaches can feel deeply personal and understand the genuine concern this creates for our customers. 'Right now we're focused on providing the answers and transparency they deserve.' Legal experts suggest the incident could lead to a class action against Qantas after compensation claims were made against Optus and Medibank following major breaches in 2022. The Optus data breach saw hackers gain access to names, phone numbers and drivers licences of the telecommunications giant's customers. A ransomware gang also breached Medibank Private, sharing private customer data online in a bid to blackmail the health insurer into paying a ransom.

Bombshell new push for Anthony Albanese's proposed super tax to go even further: What it will mean for YOUR money
Bombshell new push for Anthony Albanese's proposed super tax to go even further: What it will mean for YOUR money

Daily Mail​

time4 hours ago

  • Daily Mail​

Bombshell new push for Anthony Albanese's proposed super tax to go even further: What it will mean for YOUR money

A former bureaucrat who worked closely with Treasurer Jim Chalmers wants boomer retirees to be hit with a new tax on superannuation. A 15 per cent earnings tax applies to super balances during the accumulation phase when someone is working. But the superannuation becomes tax free when someone turns 60 and can enter the retirement phase of super, an option now available to all baby boomers. Ken Henry, a former Treasury secretary, wants retirees to pay a new earnings tax, depriving them of that tax-free status, now available for super balances of up to $2million. 'There are other ways of increasing the taxation that applies to high superannuation balances and improving the intergenerational equity of the superannuation system,' he told The Conversation's chief political correspondent Michelle Grattan. Dr Henry said it was unfair for wealthier, older Australians to get superannuation tax breaks. 'The thing that stands out is this big difference between the taxation of superannuation fund earnings in the so-called accumulation phase and the treatment that they get in the so-called pension phase,' he said. 'So, young people, again, these poor young workers, struggling and see the earnings on their accumulating superannuation balances being taxed at 15 per cent whilst those who have big superannuation balances and are in the retirement phase, well the earnings in their superannuation funds are completely tax exempt. And that just seems rather weird.' Dr Henry's 2009 tax review for Kevin Rudd's government proposed halving the superannuation earnings tax to 7.5 per cent, but applying it to both the accumulation and retirement phases of super. 'Halving the tax on superannuation earnings to 7.5 per cent would further increase retirement savings,' it said. 'Applying the earnings tax to the pension phase would considerably simplify the compliance requirements of superannuation funds. 'A structural weakness in the current retirement income system is a failure to provide products that would allow a person to manage longevity risk.' Chalmers was former treasurer Wayne Swan's deputy chief of staff when Dr Henry proposed taxing the retirement phase of super. The Actuaries Institute last year proposed replacing the 15 per cent superannuation tax on earnings with a 10 or 11 per cent tax on both the accumulation and retirement earnings phases of super. Dr Henry, however, is not campaigning against Labor's plan to slap a new 15 per cent tax on unrealised gains on super balances above $3million. This means super capital growth would be tax on the notional or paper value of retirement savings above this threshold before assets are sold - marking a departure from the usual capital gains tax practice of a taxing kicking in after assets are sold. 'I'm not opposed to it. The thing that stands out most, when you look at the way that superannuation is taxed is not that unrealised capital gains is not taxed,' he said. Labor needs the Greens in the Senate to pass its Better Targeted Superannuation Concessions bill. Parliament is resuming on July 22 and the government is proposing to have its super tax plan backdated to the start of this new financial year, July 1. The Greens want the threshold lowered from $3million to $2million but indexed for inflation. Nick McKim, the party's economic justice spokesman, said richer Australians needed to pay more tax. 'Over time Australia's superannuation system has become less about providing a dignified retirement for working people, and more of a vehicle for wealth accumulation. This needs to change,' he said. 'The Greens want to ensure that very wealthy Australians pay their fair share of tax, so that governments can do more to support people who need it.' 'Obviously we have not yet seen the legislation or regulations that Dr Chalmers intends to introduce.' A productivity-focused economic roundtable is being held in August, which will include discussions on tax policy. Chalmers in March praised Dr Henry when asked about his observation that relying too heavily on income tax revenue was hurting young people. 'I think the world of Ken Henry. I take his opinions very seriously. I worked with him very closely in this building, actually not that long ago and so I respect Ken and when he makes comments like that, I take them seriously and I do reflect on them,' he told Sky News. Super earnings have been tax free in the retirement phase since July 2007 but an indexed cap was introduced in 2017. A spokesman for Chalmers suggested Dr Henry's suggestion would be unlikely to become government policy. 'Our tax policies haven't changed. We've got a significant tax reform agenda that we're rolling out,' he told Daily Mail Australia. 'Our focus when it comes to tax is our tax cuts for every taxpayer, improving tax compliance, ensuring multinationals pay a fairer share of tax, our changes for high balance super.'

Commonwealth Bank issues urgent mortgage warning to Aussies: Do this to LOWER your repayments
Commonwealth Bank issues urgent mortgage warning to Aussies: Do this to LOWER your repayments

Daily Mail​

time8 hours ago

  • Daily Mail​

Commonwealth Bank issues urgent mortgage warning to Aussies: Do this to LOWER your repayments

Australia's biggest home lender is urging borrowers to contact their bank if they want to trim their monthly mortgage repayments following an expected official rate cut tomorrow. Financial markets are universally expecting the Reserve Bank of Australia to cut the cash rate on Tuesday by another 25 basis points, which would take it down to 3.6 per cent for the first time since May 2023. But RBA rate cuts don't necessarily translate into lower monthly mortgage repayments unless a borrower contacts their bank, with an average borrower set to save $100 a month with each cut. The Commonwealth Bank has revealed only 10 per cent of home borrowers chose to reduce their monthly direct debit mortgage repayments in May, when the RBA last cut rates. Borrowers aged 31 to 50, who are more likely to be raising children and battling the cost-of-living crisis, were more likely to opt to reduce their repayments. Investor landlords were also more likely to ask to cut their repayments, despite the tight rental vacancy rate. Commonwealth Bank general manager of home buying Tess Sutherland said most borrowers preferred to keep their existing monthly repayments, following an RBA rate cut, so they could pay off their loan faster. 'One in ten eligible customers opted to lower their home loan repayments after the May rate cut, which is really similar to what we saw following February's cut,' she said. 'It shows only a small percentage of customers are freeing up their cash, while most are maintaining higher repayments to get ahead on their loans.' Of those who chose to reduce their loan repayments, 39 per cent came from New South Wales, the home of Australia's most expensive property market, Sydney. Ben Perham, Macquarie Bank's head of personal banking, said many borrowers battling the RBA's 13 hikes in 2022 and 2023 had forgotten about the process of asking for mortgage repayments to be lowered after RBA cuts. 'It's been a long time since a rate-cutting cycle and many Australians with a mortgage or savings account may need a rate cut refresher,' he said. 'The questions you need to ask your bank in a falling rate environment are different, and the answers they give you could cost you thousands. 'If you're not getting the best deal, it's time to switch.' Borrowers can pay off the principal of their mortgage faster if they keep their repayments unchanged following an RBA rate cut. Canstar calculated a borrower with an average, $660,000 mortgage would save $150,854 and be paid off six years earlier, on a 30-year loan, if they opted to keep repayments the same instead of reducing their repayments every time the RBA cut rates. Sally Tindall, Canstar's data insights manager, said this was the best way to get ahead financially. 'Not automatically adjusting a borrower's direct debit in the event of a rate cut might seem, at first glance, unfair but it actually unleashes the potential for you to save tens of thousands – in some cases, hundreds of thousands – in interest charges if you can keep those higher repayments up for the life of the loan,' she told Daily Mail Australia. 'The bank will still automatically apply the rate cut, if they have announced it will be passing it on in full, but if your monthly repayments stay the same, the extra money you are no longer paying to your bank in interest charges will instead go into your home loan as an extra repayment, essentially helping you pay off your debt faster.' Canstar calculated that staying with the same repayment would mean $503,444 in interest over the life of the loan instead of $654,298 - a saving of $150,854. Headline inflation in the March quarter fell to just 2.4 per cent, putting it on the lower side of the Reserve Bank's two to three per cent target. A monthly inflation measure for May showed the consumer price index falling even lower to 2.1 per cent. Australia's Big Four banks, as a result, are all expecting a rate cut on Tuesday afternoon. They had been expecting the RBA to wait until August, following the late-July release of June quarter inflation data. The futures market is now expecting the RBA to cut rates in July, August, and again in November, which would take the cash rate to 3.1 per cent for the first time since February 2023. A quarter of a percentage point rate cut on Tuesday would save a borrower with an average, $660,000 mortgage $106 a month on repayments, if they contacted their bank. This would see monthly repayments fall from $4,081 to $3,975, as a popular CBA variable rate fell from 6.29 per cent to 6.04 per cent. A borrower, however, can make even lower minimum monthly repayments of $3,645, but take longer to pay off their loan.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store