Increased savings and low interest rates during the COVID-19 pandemic have homeowners in a better position than pre-pandemic, as they brace for changing economic conditions, according to a Bankwest analysis of mortgage repayments.
The Bankwest data revealed that a rapid uptake in home loan offset accounts, which enable households to use their savings to help pay down their home loans, has significantly driven the surge in home loan repayments.
The analysis also found a significant increase in the volume of savings placed in offset accounts, with homeowners nearly tripling the average rate of savings, helping improve customers’ financial position.
More than 90% of customers were ahead on their home loan repayments in March, with a 45% increase in the average months by which they were ahead, which was about three years, figures showed.
A key driver to the improved position was a spike in offset account balances, which increased 63% from June 2019 to March 2022 – nearly triple the rate of personal savings growth for the period (23%).
The rollout of Bankwest’s in-app self-service feature, Quick Account Opening (QAO) has also enabled customers to maximise their paydown progress. Since its launch in December 2020 for both individual and joint offset accounts, the number of offset accounts in use grew by 20%, with QAO currently accounting for 67% of openings.
“We’ve seen throughout the pandemic that savings balances were on the rise, and this data shows that many homeowners took advantage of low interest rates to channel those savings into paying down their home loan,” said Peter Bouhlas, Bankwest general manager home buying. “The behaviour in hindsight is likely to prove extremely helpful for those who were able to pay extra off their home loan, as we enter a period of rising inflation and cost-of-living pressures. We’re now seeing customers are ahead on their repayments by about three years, and the growth in offset savings highlight the power of utilising all the tools available, especially with home loans offering multiple offset accounts.”
Bouhlas urged those customers who were not able to fortify their financial position to get in touch with the bank so they can better understand their circumstances and work with them to identify how best to support them.
