Rush is on to pay off Mortgages
A recent study by the CBA has shown that 98% of their owner occupied home loan customers are paying more off their mortgage than they need to.
The CBA’s current variable rate is 6.8%, yet 40% of customers are making repayments at the equivalent of a rate between 6.8% and 10%, and 58% are paying at an equivalent rate of above 10%. The customers cannot take all the credit for this foresight as the CBA is encouraging its lending staff to make customers aware that rates are at a low point and will eventually rise, so paying at a higher level now will provide some protection for the future.
Naturally this has led to a drop in profitability for these loans, but with loan arrears at their lowest in five years and write-offs at 0.3% it would appear to be a fair compromise for the bank.