Photo: RNZ / Dom Thomas
A big chunk of New Zealanders is ahead on their home loans, potentially saving them hundreds of thousands of dollars.
A survey of the main banks by RNZ showed that significant numbers of borrowers at each had paid off more of their home loans than they were required to by this point in their loan term.
In total, there are about a million home loans across the country.
Westpac said about 65 percent of its home loan customers were at least three months ahead on their repayments, by an average $12,000.
"As of 31 March, 0.54 percent of our home loan book was in 90-plus day arrears, a small rise on the previous year."
ANZ said its customers were also showing good resilience, despite tougher economic times.
More than 40 percent of home loan customers were ahead by at least six months and 48 percent had a savings buffer of $5000 or more.
"Over the past three months just under a quarter of all home loan customers refixing at a lower rate have either kept their repayment amounts the same or increased them which means they will now be paying off their home loans faster than before."
Doing so can save significant amounts of money.
Sorted's mortgage calculator shows someone with a $500,000 home loan over 30 years who had been paying 6.14 percent with repayments of $702 a week and who refixed at 4.75 percent and kept the payments the same could save more almost $300,000 in interest and pay off their loan seven years early.
Kiwibank said about 40 percent of its fixed-rate home loans were being repaid ahead of the minimum required.
"Our approach is to give customers the flexibility and support to get ahead. For example, when we lower variable interest rates, we keep repayments the same, helping customers pay off their variable loans faster."
BNZ said 55 percent of its customers were ahead on repayments, by an average two years.
Loan market mortgage adviser Karen Taterson said she recommended people keep their payments the same when they came to refix even if rates had dropped. She said some people were seeing "massive" decreases in loan term and interest rate savings.
She said it also meant they had the ability to cope with any increases in interest rates in future.
How much could you save?
Note: This assumes that your interest rate remains lower through the rest of your loan term, which may not be realistic.
- $500,000 owing over 30 years, previously paying 7 percent, refixing at 4.7 percent: If you keep your repayments at $768 a week, you'll repay your loan 11 years earlier and save more than $400,000 in interest.
- $500,000 owing over 30 years, previously paying 5.5 percent, refixing at 4.7 percent: If you keep your repayments at $655 a week you could pay off your loan five years early and ave about $180,000 in interest.
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