New research from CommBank has revealed the vast majority of Australian home owners were preparing for an interest rate rise prior to the Reserve Bank’s decision to increase the cash rate in May.

According to the research, more than 90 per cent of Australian home owners have taken steps to mitigate the impact of rising mortgage rates. Close to half (47 per cent) reduced their living costs, 42 per cent built up their savings, and almost two fifths (38 per cent) have been making additional repayments on their home loan to get ahead. The research also found that 37 per cent of Australians have been putting money into their offset/redraw account and a third (33 per cent) have been looking for cheaper providers for utilities/services.

CommBank’s Executive General Manager of Home Buying, Dr Michael Baumann, said there is a range of tools and offers that customers may not be aware of which highlights the important role lenders and brokers play in supporting customers in the current environment.

“We know that one in two CommBank customers are more than three months ahead of their home loan repayments and it’s encouraging that the majority of Australian homeowners are taking proactive steps to continue to improve their financial position with rates expected to continue to increase over the next 12-18 months.

“We are uniquely positioned to help home loan customers manage cost of living pressures through exclusive offers from our suite of innovative partners, including local telecom provider More that offers great savings on unavoidable and ongoing costs like internet.

“Through NetBank and our industry leading app, eligible customers with a variable rate loan are also able to apply to split their home loan at any time. This can give them the certainty of a fixed rate and the flexibility and features of a variable rate, including access to multiple offset accounts on eligible home loans. Depending on their circumstances, they could save thousands in interest expenses over the life of their loan.”

We have seen higher splitting activity and a shift to fixed rates in response to the recent cash rate increase as customers explore their options. Since the start of May splitting activity has more than doubled. 

Five ways homeowners can be savvier with their home loan:

  1. Take advantage of offers and partnerships: With the rising cost of living, looking for deals on everyday services like utilities is a great way for homeowners to save money and reduce expenses. CommBank customers can access exclusive offers through the bank's partners, like More.
    CommBank customers can currently access an exclusive 30 per cent off More nbnTM plans for the first 12 months when they sign up using their CommBank credit or debit card as their bill payment method. Find out more via the CommBank website.  

  2. Make the most of offset: An offset account is a transaction account linked to an eligible home loan or investment home loan that can help you pay less interest over time. Eligible CommBank customers can maximise the benefits of offsetting by linking multiple Everyday Offset accounts to an eligible CommBank home or investment loan, giving you the flexibility to organise your money your way while helping to reduce the interest you’ll pay on your loan.

  3. Align your repayments with your pay: Home loan repayments are often one of the biggest recurring expenses for mortgagors. Earlier this year, CommBank launched the Home Loan change repayment tool, a new feature in the CommBank app that allows eligible customers with weekly or fortnightly home loan repayments to sync their home loan repayments with the frequency and day of the week they receive their salary.
    The new feature is designed to give customers control to be able to align their home loan repayments to when and how often they are paid. Emerging research suggests that seemingly small changes, like aligning a customers’ home loan repayment day with their pay day, can make it easier for them to manage their finances. The digital self-service nature of the tool allows eligible customers to quickly and easily make changes in the CommBank app.

  4. Find certainty and flexibility with a split loan: Eligible CommBank customers can apply to split their loan through the CommBank app and NetBank, making it a seamless digital experience. A split home loan can give you both the certainty of a fixed rate for one portion of your loan alongside the benefits of a variable rate home loan such as redraw, offsets on eligible loans, and unlimited additional repayments. This gives you the flexibility to structure your home loan to suit your individual needs by choosing the loan amount, loan type, loan term and repayment structure for each loan.

  5. Make additional repayments: Regardless of whether you have a fixed or variable rate home loan, there are ways you can save interest on your loan. If your budget allows, making additional repayments can help you to pay your loan off sooner. For example, CommBank customers with our Standard Variable Rate or Extra home loans can make unlimited additional repayments, while customers with our Fixed Rate home loan can make up to $10,000 in additional repayments each year of their fixed rate term before additional charges may apply.

CommBank has a range of resources available to help customers manage their home loan in a rising rate environment.

Customers can estimate how much money their home loan repayments may increase via the home loan repayments calculator. Customers can also use our budget planner tool to help estimate how they can manage their income and expenses to meet their goals.  

Customers who are falling behind or think they may fall behind with home loan repayments can message us to be connected with our Financial Assistance Solutions Team.

We also encourage customers to speak with us about how we can support them via our extensive network of lenders and brokers. 

About the research

The survey was conducted by the House of Brand Group, with fieldwork conducted between 16/04/2022-21/04/2022, amongst a sample of n=1,072 nationally representative respondents with quotas set on age, gender and location. Of this sample, n= 419 have a home loan.

Things you should know

Information is subject to change and has been prepared without considering any person’s objectives, financial situation or needs. Terms and conditions and target market determinations are available online and should be considered before making any decision about what’s appropriate for you. Fees and charges may apply. Applications are subject to approval.