Just 8% of first-home buyers opting to reduce repayments, suggesting household optimism on the up
Commonwealth Bank’s latest home loan figures show that while many borrowers are taking advantage of rate relief, first-home buyers remain less likely to reduce their mortgage repayments.
New data shows that just 11% of eligible CBA customers lowered their direct debit repayments following the August variable rate reduction.
The number is consistent with borrower behaviour after the February and May cuts, despite the fact that rate reductions now equate to larger potential savings – around $240 a month for an average $500,000 loan.
CBA’s executive general manager of home buying Marcos Meneguzzi was surprised by the consistency of borrower behaviour.
“Following each rate cut this year, the percentage of customers reducing their direct debit repayments has been almost identical at the same point in time. That is even as the potential savings from reducing repayments have increased,” he said.
First-home buyers stay put
Notably, only 8% of first-home buyers chose to reduce their repayments.
A CBA case study highlighted 29-year-old Sydney-based first-home buyer Libby Strassmeir, who adjusted repayments only slightly with each cut.
“Keeping my repayments above the minimum gives me the capacity to live my life and enjoy things with my family and friends, while also still feeling like I am making a good financial decision, chipping away at my larger mortgage,” Strassmeir said.
Her approach demonstrates the balancing act many new borrowers face: Building buffers while managing lifestyle and cashflow.
Borrower age and life stage matter
Borrower decisions also diverged across age brackets. The 31-40 cohort was most likely to reduce repayments (14%), while just 7% of over-60s and 8% of under-20s made changes.
This reflects the different priorities of customers in different age brackets – families juggling childcare and cost-of-living pressures may prioritise immediate cashflow, while older borrowers are less inclined to alter long-standing repayment habits.
Regionally, New South Wales and the ACT led the way, with nearly 14% of borrowers lowering their direct debit amounts. Victoria followed at 12%, while Queensland and South Australia both sat at 9%. Borrowers in Western Australia, Tasmania, and the Northern Territory were the least likely to adjust.
Optimistic signs for household finances
CBA’s head of Australian economics Belinda Allen reckoned the data paints a positive picture for household sentiment.
“More broadly, we are seeing the household sector show signs of improvement after a challenging couple of years," Allen said. "In our latest Household Spending Insights Index we have seen six months of consistently better spending momentum, led by those who rent and those who have a mortgage.
“Improvements in household income driven by lower inflation, lower interest rates and income tax cuts have all helped. We are optimistic this trend in household spending should continue in the last few months of the year and into 2026.”
Attention now turns to tomorrow, when the Reserve Bank of Australia (RBA) votes on whether to cut rates for the fourth time this year.
While market consensus points to the RBA holding at 3.6%, there is no absolute certainty, given the unpredictable nature of the central bank in 2025.
