A Bankwest analysis of mortgage repayments has shown increased savings and low interest rates during COVID have homeowners in a better position than pre-pandemic, as they prepare for changing economic conditions.
The Bankwest data revealed the surge in home loan repayments has been driven significantly by a rapid uptake in home loan offset accounts, which enables households to use their savings to help pay down their home loans.
Bankwest looked at the position of home loan repayments across the past 22 months, comparing the figures to 2019 levels, and found a significant increase in the number of customers ahead, and how far ahead they were.
The data also revealed a significant increase in the volume of savings placed in offset accounts, with homeowners nearly tripling the average rate of savings, playing a key role in customers improving their financial position.
The figures showed more than 90 per cent of customers were ahead on their home loan repayments in March 2022, with a 45 per cent increase in the average months by which they were ahead, which was about three years.
Bankwest’s data showed a key driver to the improved position was a surge in offset account balances, which grew 63 per cent from June 2019 to March 2022 – nearly triple the rate of personal savings growth for the period (23%).
The introduction of Quick Account Opening (QAO) – an in-app self-service feature – for offset accounts in the Bankwest App also appeared to better enable customers to maximise their paydown progress.
QAO for both individual and joint offset accounts has been available since December 2020 and, in that time, the number of offset accounts in use rose by 20 per cent, with QAO currently accounting for 67 per cent of openings.
Bankwest General Manager Home Buying Peter Bouhlas said: “Bankwest strives to be a simple, everyday bank for those who own, or aspire to own a home, and these figures are promising given today’s economic conditions.
“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.
“That 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 ahead on their repayments by about three years, and the growth in offset savings highlights the power of utilising all the tools available, especially with home loans offering multiple offset accounts.
“There are, of course, those customers who were not able to fortify their financial position and who will be looking at today’s cost of living pressures with concern, and we encourage them to get in touch with us so we can understand their individual circumstances and work with them to identify how best to support them."